9789657

523216

ISBN 978-965-7523-21-6

Natural Gas in the Eastern Mediterranean

Casus Belli or Chance for Regional Cooperation?

Editors:

Dr. Roby Nathanson

Ro’ee Levy

Tel Aviv,

November 2012

©All copyrights belong to Friedrich-Ebert-Stiftung and the Institute

for National Security Studies

Cover by Assaf Ben-Ari, assaf-ba@bezeqint.net

I SBN 978- 965- 7523- 21- 6

9 789657 523216

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Table of Contents

INTRODUCTION ........................................................................................................ 7

FACTS AND FIGURES - NATURAL GAS IN THE EASTERN

MEDITERRANEAN .................................................................................................... 9

LEGAL PERSPECTIVE AND BORDER DISPUTES ........................................... 13

UNITED NATIONS CONVENTION ON THE LAW OF THE SEA ........................................ 14

CYPRUS’S LEADING ROLE IN BILATERAL AGREEMENTS ........................................... 17

THE ISRAEL-LEBANON BORDER DISPUTE ................................................................. 20

TURKEY’S LEGAL STANCE ........................................................................................ 23

NATURAL GAS DEVELOPMENT ......................................................................... 28

PRODUCTION AND ENVIRONMENTAL CONCERNS ...................................................... 28

TRANSFER ................................................................................................................. 30

EXPORT OPTIONS ...................................................................................................... 31

SOCIO-ECONOMIC ASPECTS .............................................................................. 37

DOMESTIC DEMAND .................................................................................................. 38

SHALE OIL ................................................................................................................ 40

EXPORT SHARE ......................................................................................................... 42

DISTRIBUTING THE PROFITS ...................................................................................... 44

GEO-POLITICAL CONSIDERATIONS ................................................................ 47

BACKGROUND - STRATEGIC CONTEXT ...................................................................... 48

ENERGY SECURITY .................................................................................................... 49

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EUROPE AND THE REGION ......................................................................................... 51

RUSSIA’S PERSPECTIVE ............................................................................................. 54

CASUS BELLI OR REGIONAL COOPERATION? ............................................. 57

NEGATIVE INFLUENCES ............................................................................................. 57

Cyprus – Turkey................................................................................................... 58

Turkey – Israel ..................................................................................................... 60

Israel – Lebanon .................................................................................................. 61

POSITIVE INFLUENCE................................................................................................. 62

Israel – Cyprus .................................................................................................... 62

SUMMARY ................................................................................................................. 64

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The Israeli-European Policy Network

The Israeli-European Policy Network (IEPN - www.iepn.org) works under the

direction of the Israel Office of the Friedrich-Ebert-Stiftung (FES), and its partners,

the MACRO Center for Political Economics, Tel Aviv and the Universität der

Bundeswehr in Munich, Germany.

Since 2003 IEPN aims to uphold a continuous, long-term, constructive and critical

dialogue between decision-makers, key public figures, academics, journalists and

other professional groups from Israel and the EU on pertinent issues in EU-Israeli

relations and wider Middle East politics. IEPN focuses on economic, social, political

and security issues which are of common interest to both sides and on the potential of

increasing Israel's convergence with Europe. What distinguishes IEPN from other

organizations engaged on similar issues is not only its multi-layered, flexible structure

and its focus on concrete issues, but also its twin anchorage in the EU and in Israel.

The Institute for National Security Studies

The Institute for National Security Studies (INSS – www.inss.org.il), an independent

and non-partisan institute, is Israel's leading think tank on issues relating to Israel's

national security agenda. Positioned between the more superficial analysis of

journalism and the slower-paced analysis of academic research, INSS is committed to

encouraging new dynamic ways of thinking, devising creative policy solutions, and

expanding the traditional contours of establishment analysis.

INSS sees its policy-oriented research as a means to launch, engage in, and shape the

public debate of the leading issues on Israel's national security agenda, identify policy

opportunities, and propose creative solutions to the national security challenges facing

the State of Israel.

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Executive Summary

In the past few years large gas fields have been discovered in Israel and Cyprus, and

the Eastern Mediterranean region is believed to be holding substantial amount of

natural gas and perhaps oil. The public agenda has so far focused on the economic

potential of these new findings. Natural gas will assist the local industry, lower the

electricity prices while polluting less, and has potential to revolutionize car fleets

which are currently dependent on oil. Natural gas may even be used to produce shale

oil. Furthermore, gas will probably be exported to Europe or Eastern Asia, and the

taxation of the natural resource profits can create new revenues for the region’s

countries. The natural gas profits will have to be used wisely in order to prevent major

changes in the exchange rates which may hurt the competitiveness of local

manufacturing industries.

With the potential, the new findings also bring major challenges. The countries in the

region will have to delimit their maritime borders. So far, Cyprus has been leading

such efforts and has signed and ratified agreements with Israel and Egypt. However,

Israel and Lebanon have a border dispute over 850 square kilometers, an area with

natural resources potential. The dispute between Cyprus and Turkey is more

complicated. The Turkish Cypriots object to all drilling operation by the Republic of

Cyprus at least until an agreement is reached between the sides. In addition, Turkey

claims that the Republic of Cyprus license blocks overlap with its continental shelf.

Resolving the legal disputes may be necessary in order to attract major investors and

maximize profits.

The development of the new natural gas fields is also challenging. Private developers

and the governments in the region will have to lay infrastructure to transfer, distribute

and export the gas. Gas treatment facilities often cause local objections which may

delay the process. In addition, environmental and safety regulations will need to be

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taken into account. The natural gas may be exported either through a pipeline or in

liquid form. A pipeline connecting the new fields to Turkey does not seem likely due

to the tensions with Israel and Cyprus, while connecting the fields to Greece will

demand a very large investment. The gas could be liquefied in a LNG plant which

would probably be constructed in Israel or Cyprus or offshore, using new technology

to construct a floating plant (fLNG). The main risk with such a plan is that natural gas

prices may decrease due to increasing supply worldwide and in such a scenario LNG

may not be cost-effective.

Perhaps the most important aspect of the natural gas findings is geo-strategic. The

new discoveries will reduce the energy dependence of countries in the region. Still,

relying solely on natural gas also endangers countries’ energy security, and they may

need to take precautionary measures to prevent power disruptions in case of technical

accidents, natural disasters or terrorist attacks. Europe, currently dependent on Russia

for natural gas, may have an interest in diversifying its energy resources and buying

natural gas from the Eastern Mediterranean, especially if natural gas can be produced

in Cyprus, a member of the EU. Russia, on the other hand, has no interest in new

competition in the natural gas market and therefore prefers to see the natural gas

consumed within the region or exported to East Asia. In any case, if natural gas is

exported, Russia would like to take part of the project.

Within the region, the new discoveries have increased tensions between Israel and

Lebanon, and between Turkey and Cyprus. In the former case, leaders in both

countries used warmongering rhetoric, but recently the military threats have reverted

to (unilateral) legal arguments, and the dispute has been limited to a specific territory,

where both sides are avoiding drilling operations. The Turkish-Cypriot dispute seems

like the greatest cause for concern at this stage. Turkey has been using explicit threats

to promote its interests. It claimed that it will not allow drilling in the disputed area

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and will not allow international companies which operate under the Republic of

Cyprus’s concession blocks to take part in future Turkish energy projects. The natural

gas discoveries also had positive influences on the region, and the best example is

probably the increased cooperation between Israel and Cyprus.

To conclude, the new gas findings bring tremendous potential for the region. While

experts can assist in resolving the technical and legal issues, political will is needed in

order to ensure that natural gas will increase cooperation between the countries

instead of exacerbating existing tensions.

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Introduction

Recently significant amounts of natural gas have been discovered offshore in the

Eastern Mediterranean. Countries that have so far been dependent on energy imports

will have the opportunity to develop massive gas fields, increase their energy security

and even export natural gas to other regions. The discoveries are expected not only to

affect the energy market, but may also be considered a game-changer with geo-

strategic, legal and social implications.

Since natural gas is expected to have a dramatic impact on the regions, the Friedrich-

Ebert-Stiftung, the Macro Center for Political Economics and the Institute for

National Security Studies organized a conference in the framework of the Israeli-

European Policy Network. The conference, titled “Natural Gas in the Eastern

Mediterranean: Casus Belli or Chance for Regional Cooperation?” took place on July

5, 2012 in Tel Aviv. It included many international experts from the region and the

EU and focused on the strategic and legal aspects of the natural gas findings. This

publication summarizes the main findings of the conference, but does not necessarily

represent the opinions of the speakers at the conference or the organizations they

represent.

The first section will describe the natural gas discoveries; exploration activities will be

explained along with estimates of current discoveries. The second section will deal

with the legal implications of the natural gas fields including the international

maritime law, the legal disputes between the countries and delimitation agreements.

The next section will focus on the development of the fields, from the production

stage to transporting the natural gas and will discuss potential export options. The

following section will deal with the economic and social considerations of the demand

for gas, possible uses and regulation. The last sections will discuss the geo-strategic

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aspects of the discoveries: The relations between the region and other actors, and the

relations between countries within the region.

“Many of us, when we were kids, used to study geography by maps. One of the maps focused

on energy resources and these resources in the Middle East were concentrated in the East:

Saudi Arabia, Iran, Iraq, the UAE. Energy is now moving west to countries that never before

had this wealth of natural resources. Countries that never before enjoyed this natural gift are

now coping with a new challenge”

Major General (ret.) Amos Yadlin

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Facts and Figures - Natural Gas in the Eastern Mediterranean

Gas and oil explorations have been persistently conducted in the region for many

decades. In Israel, small gas fields were discovered in late 1950s in the southern

Judean Desert. Offshore drilling in the Eastern Mediterranean began as early as 1969,

but during the next 30 years the 17 exploration wells drilled turned out to be dry. Only

in 1999-2000 were the first major discoveries made offshore Ashkelon. The first field

discovered was Noa and the biggest of the fields was Mary B. The former was

recently developed and the latter started to supply gas to the Ashdod power station in

2004. The Mary B field (30 BCM) is in the depletion stage and may later be used as a

natural gas storage field. Off Gaza, the Gaza Marine Reserve was discovered in 1999

and contains more than 30 BCM; the field has never been developed, mostly due to

failed negotiations and the political situation in the area.

The Mary B discovery was not significant internationally, but supplied domestic

needs and demonstrated that the region has great natural gas potential. The next six

exploration wells did not lead to new discoveries until the Tamar field was discovered

in 2009, the largest discovery in the world that year. A year later, the Leviathan field

was discovered representing the largest natural gas discovery in a decade. While the

Mary B field is 250 meters deep and located west of Ashkelon, the Leviathan and

Tamar fields, both discovered by Noble Energy, are 1500-1700 meters deep and

located 80-135 km west of Haifa. The Tamar field contains approximately 275 BCM,

and the Leviathan field is estimated to contain 480 BCM. To put the number in

perspective, in 2011 Israel consumed 5 BCM of natural gas. Therefore, it is clear that,

even with demand increasing, the new gas finds could supply Israel’s gas needs for

several decades at least. The Tamar production platform is expected to be installed by

the end of 2012 and production should begin in the second quarter of 2013.

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Other smaller wells discovered in 2009-2012 include the Dalit field west of Hadera

(estimated at 7-8 BCM), the Tanin field north-west of the Leviathan field

(approximately 34 BCM), the Dolphin field south-east of Leviathan (2.3 BCM) and

the Shimshon field west of Ashkelon (16 BCM). In addition, ultra-deep drilling being

conducted in the Leviathan could discover much more natural gas and perhaps oil, for

which there is substantial potential in the region, but has yet to be discovered.

Figure 1: Natural gas fields in the Eastern Mediterranean

Israel is leading the exploration in the region but other countries are not far behind. In

2007 Cyprus held the first round of auctions for exploration licenses. The Aphrodite

gas field was discovered in December 2011 west of Leviathan in “Block 12”. The

Leviathan

Tanin

Tamar

Dalit

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field is believed to hold 200 BCM of natural gas with potential for oil in deeper

horizon. Cyprus is in the process of a second licensing round for 12 more exploration

blocks.

Lebanon and Syria have also announced timetables for offshore licensing rounds.

Syria has delayed the process due to the political situation, whereas in Lebanon the

first licensing round is possible as early as 2013. According to a recent estimate

initiated by the Lebanese government, 708 BCM of natural gas may be available

offshore south-west Lebanon. The country has significant gas and perhaps oil

potential and is currently in the process of legislation to regularize gas exploration.

These discoveries are all part of the Levant Basin offshore Israel, Gaza, Lebanon,

Syria and Cyprus. Most of the basin is covered by the Exclusive Economic Zones

(EEZ) of Israel, Lebanon and Cyprus and almost half of it is in Israel’s EEZ. A recent

US Geological Survey estimated that the basin holds close to 3,450 BCM of natural

gas and 1.7 billion barrels of oil. The Nile Delta Basin, in the south-east

Mediterranean, situated in Egypt’s and Cyprus’s EEZ, is estimated to hold even more

natural gas (6,315 BCM) and oil (1.8 billion barrels).

Together with the Aegean Basin offshore Greece, it appears that the Eastern

Mediterranean has huge oil and gas potential, and it is clear why there is worldwide

interest in exploration of the region. However, it should be noted that all the

estimations regarding the potential in the area have a very high level of uncertainty.

On the one hand, after many failed drillings in the past, it could turn out that the basin

has less potential than expected. On other hand, there are claims that according to

recent 3D seismic data, the current estimates may even be conservative.

The natural gas resources are likely not only to benefit the economy, but also to have

geo-strategic value. Therefore, it is not surprising that shortly after large amounts of

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natural gas were discovered, territorial disputes over these resources arose. The legal

nature of these disputes will be discussed in the following section.

“Trying to evaluate the value of the potential of natural gas reserves according to the US GS

report of 2010… we took reference prices (a conservative price of $78 for oil) and we came to

figure of close to 717 billion US dollars.”

Sagi Karni

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Legal Perspective and Border Disputes

Abstract: The most important international maritime agreement is the United Nations

Convention on the Law of the Sea (UNCLOS). The convention defines where countries can

exploit natural resources according to their Exclusive Economic Zones (EEZ) or continental

shelves. However, even with UNCLOS, which reflects customary international law, countries

have to agree on their maritime borders since their various maritime zones often overlap.

Cyprus has signed and ratified EEZ delimitation agreements with Israel and Egypt, and an

agreement between Cyprus and Lebanon was signed but not ratified by Lebanon. Several

territorial disputes in the region remain unresolved. Israel and Lebanon do not agree on the

maritime border between the countries, and though the size of the disputed territory is

relatively small, the area has potential to be full of natural resources. Within Cyprus, the

Turkish Cypriots claim that they have an equal right to all natural resources surrounding the

island and demand that the Greek Cypriots share the new natural gas discoveries with them.

In addition, Turkey argues that the license blocks of the Greek Cypriots overlap with its

continental shelf.

In this section we will analyze the territorial claims for resources in the region

according to the main sources of international law. We will discuss the United Nations

Convention on the Laws of the Sea and customary law, examine Cyprus’s leading role

in signing bilateral agreements in the region, analyze the Israel-Lebanon border

dispute and present the Turkish legal position according to its interpretation of

international law.

“There are three main sources of international law: Treaties, Custom and General Principles.

An important auxiliary function is accorded to judicial decisions and the teachings of the most

highly qualified lawyers.”

Christoph Moosbauer

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United Nations Convention on the Law of the Sea

Since 1945 the freedom of the seas doctrine has been challenged, and countries began

claiming jurisdiction over larger territories surrounding their shores and over their

continental shelf. Initial maritime international treaties were signed in 1958 after the

first conference on the law of the sea, but did not address the boundaries of territorial

waters. In 1973 the third conference on the law of the sea began with the purpose of

defining an international regime over the sea and in 1982 the United Nations

Convention on Laws of the Sea (UNCLOS) was signed. The convention deals with,

inter alia, navigational rights, territorial sea limits, economic jurisdiction, legal status

of resources beyond jurisdiction limits, protection of the marine environment and a

procedure for settlement of disputes between countries. The treaty came into force in

1994 after 60 nations ratified it and it is today the most important international

maritime agreement.

According to UNCLOS, the territorial sea extends 12 nautical miles (22 kilometers)

from territory. In this area the state holds full sovereignty and jurisdiction, exactly like

the land within the state's territory; however, in this area foreign vessels are granted

the right of innocent passage for purposes of ordinary navigation (so long as such does

not prejudice the safety or security of the coastal State). Beyond the territorial waters

lie 12 additional nautical miles defining a Contiguous Zone where a state can exercise

limited sovereignty by enforcing customs, fiscal, immigration or sanitary laws if an

infringement has occurred or is about to occur in its territory.

An Exclusive Economic Zone is defined in the sea as 200 nautical miles (370

kilometers) from the coast. In the EEZ the coastal nation has exclusive rights to

exploit, explore, conserve and manage natural resources, and exclusive rights and

jurisdiction over artificial islands, installations and structures, marine scientific

research and the protection of the marine environment. It should be stressed that the

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EEZ is not under the sovereignty of the state. In addition, states have exclusive rights

to harvest resources in the subsoil of their continental shelf, defined as the relatively

shallow extension of the seabed surrounding the shore.

Obviously countries' maritime zones can overlap. In the crowded Eastern

Mediterranean the distance between countries is often less than 200 nautical miles and

therefore specific rules are necessary to decide on the delimitation between the states

when there are conflicting territorial claims. The convention states in article 123 that

“states bordering an enclosed or semi-enclosed sea should cooperate with each other

in the exercise of their rights and in the performance of their duties under this

Convention”. The definition applies to the Mediterranean Sea but clearly the political

reality poses obstacles to this rule.

According to article 74 of UNCLOS “The delimitation of the exclusive economic zone

between States with opposite or adjacent coasts shall be effected by agreement on the

basis of international law”. Until such an agreement is reached states “shall make

every effort to enter into provisional arrangements of a practical nature and, during

this transitional period, not to jeopardize or hamper the reaching of the final

agreement”. If even an interim agreement is not possible, states shall recourse to

peaceful means of dispute settlement.

Dispute settlement mechanisms can include the International Court of Justice (ICJ),

the International Tribunal for the Law of the Sea (ITLOS) or arbitration. Such

mechanisms have been used successfully before. In 2002, the ICJ ruled that the

sovereignty over the Bakassi peninsula lies with Cameroon. With the support of the

UN, this decision settled a dispute between Nigeria and Cameroon and Nigeria

withdrew its troops from the region. More recently, in a 2009 verdict, the ICJ defined

a maritime boundary delimiting the continental shelf and the exclusive economic

zones of Romania and Ukraine. The countries agreed in advance that if their bilateral

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negotiations failed they would have a right to turn to the ICJ and both countries

accepted the verdict. ITLOS recently published its first decision dealing with the issue

of maritime borders, ruling on a sea border dispute between Bangladesh and

Myanmar.

When an international legal forum considers the proper methodology for delimitation,

it uses a technical or mathematical analysis in order to draw an equidistance line and

then considers if special circumstances should be taken into account to provide an

equitable solution. There is no defined list of special circumstances, and they can

include unusual geographic conditions, proportionality, the existence of historical

maritime agreements and whether the states involved have granted their explicit

approval to a given de facto maritime delimitation. It seems as if adjusting the border

according to special circumstances may not be necessary in the region given the lack

of unusual geographic features and absence of relevant historic agreements relating to

the maritime arena.

“Given the circumstances in the situation at stake, the figuration of the coast here is rather

unspectacular; no adjustments seem to be necessary, and no adjustments were made also in

the treaties concluded between certain states.”

Prof. Daniel Erasmus Khan

162 nations have so far ratified UNCLOS, including Lebanon and Cyprus, and the

number of ratifying countries is constantly rising. However, Israel, Turkey and Syria

have not ratified the convention, and the United States (which is involved in the

region since Noble Energy, an American company, has discovered and is developing

most of the gas in the region) has not ratified it either. Despite previously objecting to

UNCLOS, today the official position of the US is that joining the convention is a top

priority. Yet since a two-thirds majority is needed in the Senate to ratify the treaty, 34

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Republicans have been able to block the latest attempt to ratify UNCLOS. The

primary reason behind Turkey’s reluctance to ratify the Convention is the maritime

delimitation dispute with Greece in the Aegean Sea.

Most legal experts explain that UNCLOS, and especially the rules concerning the

delimitation of the sea, binds all countries, including countries which have not signed

it, since it has become part of customary international law. Israel, for example,

generally views the convention as reflective of customary law, and considers the

provisions of the legal regimes in the maritime zones as binding. Those provisions

guided the country in its negotiations with Cyprus.

Overall, it is clear that UNCLOS provides a useful legal framework, but that states in

the region will still need to come to an agreement to define their maritime borders. We

will discuss such attempts in the following sections.

Cyprus’s Leading Role in Bilateral Agreements

Since the EEZ regime is not sufficient to demarcate the boundaries in the

Mediterranean Sea and since there are no historic maritime agreements in the region,

new delimitation agreements between the countries are required in order to provide

certainty and clarity for potential investors. Cyprus has been the leading force in

signing such agreements.

The first agreement on the delimitation of the EEZ was signed between Cyprus and

Egypt in February 2003 and entered into force in March 2004. In the same year

Cyprus declared its EEZ in legislation. Egypt and Cyprus also signed a confidentiality

agreement in 2006 and exchanged seismic data on the region.

An agreement between Cyprus and Lebanon was signed in January 2007. The

agreement was ratified in Cyprus and the country is basing its activity on it, but it was

not ratified by Lebanon’s parliament.

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Cyprus and Israel signed the third delimitation agreement in December 2010 after

short negotiations. The agreement meshed with the previous Cyprus-Egypt and

Cyprus-Lebanon agreements and states specifically that the Cyprus-Israel-Egypt

border and the Cyprus-Israel-Lebanon border could be modified in the future if all

three states agree on a change.

“The agreement with Cyprus, from the beginning of negotiations to the ratification of the

agreement took less than one year. For comparison, when five friendly European countries

decided to delineate their boundaries in the North Sea it took 15 years. The agreement

between Norway and Russia in the Barents Sea was reached only after 40 years.

So the Israel-Cyprus agreement resembles a world record. The reason for this is the mutual

interest of both countries and the desire to reach an agreement. Where there is a will there is a

way, and in spite of some disagreements in our negotiations, we succeeded in reaching the

agreement in a quick and effective way.”

Alexander Varshavsky

All three agreements signed by Cyprus are based on the principle of equidistance (the

median line principle), since no special circumstances exist to modify the

delimitation. It is important to note that all the treaties contain a standard clause which

allows for future amendments to the delimitation line when it borders with third

countries. The clause applies the principle that a legal agreement between two states

may not have an effect on a third state (the third party rule).

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Figure 2: The maritime borders of Cyprus

In addition to delimitation, Cyprus is leading the effort to sign unitization agreements.

Unitization is needed when natural gas reservoirs cross the maritime border between

countries. Currently Israel and Cyprus are in advanced negotiations regarding a

possible framework unitization agreement which may be concluded by the end of the

year. Cyprus and Egypt have already signed a framework unitization agreement

concerning the development of cross-median line hydrocarbon resources.

Unitization agreements are very complex since they involve cooperation at the

government and commercial level; the countries cooperating often have different

fiscal systems and import-export policies. In addition, it is often difficult to identify

the share of gas in each country’s economic zone and the shares may need to be

updated with further development of the reservoir. Under a unitization regime, the

countries agree that a single unit operator will develop the cross-boundary reservoir in

order to maximize profits, and the profits will be divided between the countries.

International law does not mandate that countries enter into a unitization agreement,

still they are common and are developing as international practice. The series of

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agreements between the UK and Norway often serve as the model for unitization

agreements.

Surprisingly, countries have been able to reach agreements to develop jointly

transboundary hydrocarbons reservoirs even when there was no defined border

between them. In these cases the agreements are referred to as ‘joint development

projects’ and are useful when reserves are discovered before a border between the

countries is agreed and finalized. The agreements can define a clear legal framework

to attract investors despite the border dispute, while noting explicitly that such

agreements shall not affect the maritime border between the countries or prejudice

future delimitation negotiations. The Timor Sea Treaty, an agreement between East

Timor and Australia for joint petroleum exploration, provides just one example of a

joint development project.

Joint development projects could be used in the Eastern Mediterranean when

countries cannot agree on delimitation, but such agreements still require cooperation

between the relevant parties. In some cases, such as the Israel-Lebanon dispute, which

will be described in the next section, such cooperation seems unlikely at present,

given the absence of diplomatic relations or dialogue between the two States.

The Israel-Lebanon Border Dispute

In 2010 Lebanon submitted to the UN a chart of geographical coordinates defining the

western, northern and southern limits of its Exclusive Economic Zone. The chart

unilaterally delimits the Lebanon-Israel maritime border and extends the Lebanon-

Cyprus maritime boundary southwards, such that it differs from the 2007 Lebanon-

Cyprus bilateral agreement which was not ratified by Lebanon. In June 2011, Lebanon

protested against the agreement between Israel and Cyprus, arguing that it conflicts

with Lebanon’s EEZ.

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Israel objected to Lebanon's 2010 unilateral positions on both legal and cartographic

grounds and wanted to present its own professional calculation of the maritime

border, thereby avoiding tacit acceptance of the line set by Lebanon. Therefore, in

July 2011 Israel submitted its official position to the UN on the delimitation of the

border between the countries.

“Israel does not agree with the unilateral positions that Lebanon submitted to the UN from

both a legal and cartographic point-of-view. In an effort to provide clarity as to Israel's stance

regarding the precise location of the northern limit of Israel's territorial sea and exclusive

economic zone, as determined in accordance with the dictates of customary international law

and accepted cartographic practice, Israel submitted its official position on the matter to the

UN in July 2011, pursuant to a Government decision adopted earlier that same month. In its

submission to the UN, Israel stressed that it is open to dialogue with its neighbors (including

Lebanon) on maritime border issues in line with the dictates of international law.”

Adv. Sarah Weiss-Ma’udi

Lebanon responded in September with an official letter to the UN arguing that the

Israeli claims “flagrantly violate the principles and rules of international law and

constitute an assault on Lebanese sovereignty”. Lebanon put forward an argument

that the maritime border between Israel and Lebanon is dependent among other

factors on the international land border between the countries. Lebanon argues that

Israel’s coordinates violate the 1923 Paulet-Newcombe Agreement between France

and Britain, which set the 'international border' on land and the 1949 Lebanon-Israel

armistice line. According to Lebanon, the maritime border it submitted is based on

solid cartographic ground (Israel does not accept this claim) since the western border

point lies 123 kilometers from three relevant lands points (tri-equidistant point).

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Lebanon notes that its submitted border actually aligns with Israel’s Alon exploration

blocks.

Israel, on the other hand, notes that the 1923 international land border established

under the Paulet-Newcombe Agreement is actually several meters shy of the coast

(i.e. the land line terminates several meters east of the coast) and never actually set a

point on the coast between Britain and France (now Israel and Lebanon). Israel further

notes that there is no agreed, signed map or set of coordinates attached to the Israel-

Lebanon 1949 Armistice Agreement (i.e. no detailed line was established under that

agreement). Moreover, Israel argues that there is little relevance to the position of any

licenses it granted in the area; certainly a coastal State does not have to actively grant

licenses or materialize its economic claims in order to claim maritime areas. It claims

that its submitted border should be accepted because Lebanon has already agreed to

the western point in its earlier agreement with Cyprus.

Although the length of the disputed territory in the Israel-Lebanon coast is only 22

meters, the length at the outer edge of the EEZ is approximately 17 kilometers, such

that the total size of the disputed territory is approximately 850 square kilometers. The

size of the disputed area is relatively small as compared with Israel’s EEZ, which

totals 25,000 square kilometers, and does not overlap with the gas fields discovered so

far, yet the area definitely has potential to be full of natural resources. Thus far there

have been no drilling activity in the area and the countries have not granted licenses in

the disputed territory.

The countries have avoided direct or even indirect negotiations to settle the maritime

border. Despite the ongoing dispute, negotiations seem unlikely at this juncture

considering the fact that Lebanon does not even recognize Israel. Recently it has been

reported that Cyprus is attempting to mediate between the countries. Cyprus has a

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clear interest in defining a clear border between all three countries, to attract investors

and promote joint exploration ventures.

Figure 3: Israel and Lebanon Exclusive Economic Zones Overlapping Area

Turkey’s Legal Stance

Officially the Republic of Cyprus (referenced as the Republic of Cyprus or Cyprus

throughout this publication) has sovereignty over the entire Cyprus Island and its

surrounding waters, but de facto the island is split into two. The Republic of Cyprus

controls the south of the island while the Turkish Republic of Northern Cyprus

(TRNC), recognized only by Turkey, controls the north. Two sovereign British

military base areas also lie in Cyprus – Akrotiri and Dhekelia, but it seems unlikely

that these bases will have an impact on the maritime negotiations in the region. The

Turkish-Greek rivalry is a crucial factor in explaining Turkey’s legal position in the

region which will be presented in this section.

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Turkey’s political stance is that the Republic of Cyprus should not enjoy the new oil

and gas discoveries without sharing the resources fairly with the northern portion of

the island or reaching an agreement on the future of the island. Turkey prefers that the

issues between the Turkish Cypriots and Greek Cypriots be resolved in a political

agreement. The country holds the same position in relation to its maritime dispute

with Greece in the Aegean Sea. Turkey argues that the disputes should be resolved

through negotiation, while Greece understands the dispute to be of a legal nature and

therefore requires a judicial solution.

The legal dispute between Cyprus and Turkey stems from Turkey’s reliance on the

continental shelf (on which the hydrocarbons are located) to define its Mediterranean

borders while Cyprus relies on its Exclusive Economic Zone. Prof. Tzimitras explains

though that the EEZ only grants three rights which are not covered by continental

shelves: fishing rights, exclusive jurisdiction for the protection of the marine

environment and rights over the superjacent airspace, used for offshore turbines.

Therefore, it can be argued that the EEZ regime is not necessary for resolving disputes

over natural gas and oil. The continental shelf regime grants coastal states exclusive

exploration and exploitation rights regardless of their exercise or declaration of

sovereignty (UNCLOS article 77.3), while under the conditions of the EEZ regime,

the zone has to be claimed in order to become active and no state has a right to exploit

an area if other countries claim it and the sides have not reached a delimitation

agreement. It can also be argued that the continental shelf regime is more established

and provides certainty. Finally, since Turkey did not join UNCLOS, it may claim that

the applicable treaty for the country is the 1958 Convention on the High Seas which

does not include the EEZ regime.

According to the Turkish position it is not clear that the ICJ will rule in favor of

Cyprus if it approaches the court for two reasons: First of all, in previous cases islands

25

were disregarded completely or partially by the court, for example in the Malta-Libya

maritime dispute. Turkey has tried to argue against using islands to calculate maritime

zones due to its ongoing dispute with Greece in the Aegean. Similarly, Turkey argues

that Cyprus's continental shelf should be smaller due to its size and the fact that it is

an island. Secondly, while the entitlement of certain geographical territories may be

set according to the countries’ principle rights to an area, the delimitation of the area

also depends on special circumstances. Special circumstances could include the rigid

conceptualizations of security and sovereignty in the region which do not go hand in

hand with the cooperative spirit of UNCLOS.

Turkey’s stance is backed by actions. Turkey objected to Egypt’s agreement with

Cyprus and presented its complaints to the UN claiming the agreement concerns

Turkey’s sovereign rights and stating that there is no single authority which is

competent to jointly represent the Turkish Cypriots and the Greek Cypriots. In

September 2011, after Cyprus started drilling for resources in the region, Turkey

signed a continental shelf delimitation agreement with the Turkish Republic of

Northern Cyprus. In addition, in April 2012, Turkey published the basis on which it

granted a hydrocarbon exploration license to the Turkish Petroleum Company in the

East Mediterranean. Cyprus claimed that some of the territories fall within its

Exclusive Economic Zone and argues that therefore the license granted has no legal

validity. Currently there is an overlap between the Republic of Cyprus's research

block and the Turkish continental shelf claim. However, this zone is relatively small

and probably does not hold much gas.

The Turkish Republic of Northern Cyprus has also defined research blocks

overlapping with the Republic of Cyprus blocks and has granted the Turkish

Petroleum Company rights to conduct explorations in the area. Turkey argues that the

resources of the island belong to all its residents no matter where they are found. It

26

calls on the Greek Cypriots to stop drilling or to set up a joint committee, with the

UN’s participation, which will decide on licenses and revenue sharing.

“Let me summarize briefly the official Turkish position:

a. Turkey formally does not accept the right of the Republic of Cyprus to represent, in law or

in fact, the whole island.

b. The Greek Cypriots’ unilateral actions also challenge Turkey’s maritime jurisdiction areas

in the Mediterranean area west of the island and in the south the plots overlap with Turkish

Cypriot concessions to the Turkish Petroleum Company.

c. The proposal by Turkey is either to leave the issues to the aftermath of a comprehensive

settlement, or for the two sides together to bring the issue before the UN Secretary General

and determine, ad hoc, jointly the future exploration and exploitation.

d. Turkey is not a signatory member of UNCLOS but subscribes to parts of it, for instance the

12 mile territorial sea and argues that in the jurisprudence, islands, including Cyprus for that

matter, have never been granted full effects - or in very few circumstances.

Ankara says either share the resource with Turkish Cypriots or share it with us, you decide.”

Prof. Harry Tzimitras

Unsurprisingly, the Republic of Cyprus argues that the Turkish legal arguments are

not accepted in international law. It explains that it is not just an island, but an island

state recognized by the UN and entitled to an EEZ. It further argues that all its actions

have been legal and that it would like to cooperate with Turkey to resolve the

problems of the island so that all its residents will benefit. The Republic of Cyprus

promised to share the natural gas resources with the Turkish Cypriots, but is reluctant

to participate in formal negotiations on the issue.

To sum up, international treaties, customary law, and bilateral agreements provide a

comprehensive framework for the exploitation of natural resources in the sea.

27

However, the disputes between countries are often political and not only of a technical

nature. As long as countries in the region choose not to cooperate they will usually

also find legal arguments on which to base their case. Thus, while the legal framework

has proven useful in some cases (notably between Israel and Cyprus), it has not

resolved the disputes in others (Israel-Lebanon, Cyprus-Turkey).

28

Natural Gas Development

Abstract: Natural gas development in the region is expected to encounter several challenges.

First of all, the countries in the area are not experienced in offshore drilling and may need

technical assistance in this highly specialized field. Secondly, environmental concerns will

have to be taken into consideration and new regulations may be required in order to minimize

risks associated with the development. Furthermore, new infrastructure to transfer the gas

and process it is required. Constructing new gas facilities may be delayed due to local

objections, as the cancellation of the Dor Beach natural gas entry point demonstrated.

Finally, exporting gas proves even more challenging. It may be possible to lay a long subsea

pipeline to Greece and from there export the natural gas to the European market, but such a

project would be quite costly and it is not clear if the investment would be worthwhile.

Another option is transferring the gas in liquid form to the East Asian or European markets.

For such a project an LNG plant or a floating plant (fLNG) would have to be constructed.

However, there is some risk that due to increased natural gas supply, the price of natural gas

will decline and in such a scenario the LNG option might not be cost-effective.

Before the region can enjoy benefits of natural gas, an infrastructure to extract,

transfer, process and export the gas is required. This section will discuss the

development of natural gas infrastructure, and the challenges it entails, with a focus

on Israel, where the exploitation of natural gas is at the most advanced stage in the

region.

Production and Environmental Concerns

The development of the natural gas fields creates environmental, bureaucratic and

technological challenges. Due to the depth of the region’s natural gas fields, special

equipment is needed in order to produce the gas. Offshore drilling is a very

specialized field which demands unique expertise; so the countries in the region,

which lack experience in natural resource production, rely on multinational

corporations for the technical knowhow required to develop such fields.

The environmental damages associated with offshore drilling provide a reason for

concern. Extensive drilling endangers the sea’s biodiversity and pollutes the water of

29

the Mediterranean. In addition, the Deepwater Horizon oil spill in 2010 serves as a

reminder of the risk of an environmental disaster due to offshore drilling. Though

natural gas fields may be less dangerous than oil wells, an accident is still possible (in

the form of an explosion after a gas leak). Israel is planning new laws to deal with the

environmental challenges for two reasons. First of all, some of the current laws were

written many years ago before the gas industry entered the region. Secondly, the

current laws do not always apply to the country’s EEZ.

Due to the risks and following recent environmental drilling disasters, the European

Parliament and Commission are in the process of adopting new environmental

standards and requirements. According to a new proposal, operators will be required

to prepare environmental impact assessments, site-specific contingency plans and

emergency response plans. The EU’s offshore safety standards will apply wherever

EU companies work overseas and the operators will be subject to verification by

independent bodies. Member states will have to establish competent authorities for

supervision of safety, environmental protection and emergency preparedness. The

rules will apply to all operations after a 1-2 year transition period. Therefore, they will

significantly impact offshore drilling in Cyprus, member of the EU. Any cooperation

between Israel and Cyprus will also probably be affected by the new requirements.

Extraction and production of gas is already taking place in the region. It will continue

developing, but due to all of the challenges detailed above and to new regulations,

delays in the development of the newly discovered gas fields can be expected.

“I have told you about the political delay [in developing the gas fields], the technological

delay, and geopolitical considerations. Yet we have to bear in mind that the biggest delay

might actually be caused by the administrative and bureaucratic burden.”

Dr. Antonyia Parvanova

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Transfer

After extraction, natural gas can transferred from the offshore fields through pipelines

to the gas treatment facilities. The first challenge in developing the natural gas system

is the pipelines themselves. The gas in the Aphrodite field is expected to be connected

to Cyprus through a pipeline in 2017 at the earliest. In Israel, the capacity of the

current pipeline which carries natural gas is not sufficient to deliver the anticipated

future demand. The government will need to define a mechanism to regulate the flow

of gases to various users. The Natural Gas Authority has already published an initial

document stating that the transfer of gas to small users will not be disrupted and the

rest of the users (including the Israel Electric Corporation) will receive less gas in

proportion to their average consumption.

In the long run, one solution to the problem is installing pipelines to carry natural gas

to new entry point treatment facilities. In the facilities the gas will be cleaned,

pressure will be reduced and the gas will be transferred to the national distribution

system. According to early plans an entry point to the Tamar field was supposed to

have been constructed at Dor Beach, south of Haifa. However, the plan drew

significant public objections mostly of the local community and environmental

organizations. As a result, the construction of the facility was cancelled and the gas

transfer was delayed by almost a year while the country was already facing a shortage

of natural gas due to the explosions in the pipeline which transfers gas from Egypt.

Gas treatment facilities face Not In My Back Yard (NIMBY) objections worldwide

mostly due to security and environmental reasons. Municipalities in Israel object to

the entry points and claim that they may facilitate a polluting gas industry in the area,

that the facilities may become targets for missile attacks and endanger the local

population, and that the entry points are national sites but built according to the plans

of private companies without consideration of the public interest. The municipalities

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demand that the facilities be built entirely offshore, while the government argues that

this option is unprecedented and not reliable.

The Israeli government is currently considering five possible northern locations for

future entry points, and is planning on speeding up the authorization process and

offering monetary stimulation to municipalities where the facilities will be constructed

in order to reach a final decision by the end of 2013. Some of the future entry points

may be split: the gas will enter into an offshore facility, be partially processed there,

and then the process will continue in a smaller facility onshore.

Due to the delay in building a new entry point, the developers of the Tamar field

changed course and installed a 150 km long pipeline connecting the Tamar field with

a new platform which is planned to be erected by the end of 2012. This is adjacent to

the existing platform of the Mary B field which is nearing depletion. The platform

will be connected to the Ashdod treatment facility.

After the natural gas is transferred to the country, a local network is needed to

distribute the natural gas. In Israel, a basic network exists and it will be further

developed in the coming years. Israel’s Natural Gas Lines Company is planning a new

eastern pipeline, a pipeline connecting Jerusalem to the national network and doubling

the capacity of a couple of existing pipelines. In Cyprus, there is no such network for

public or private use. The country has authorized a plan to construct a pipeline

connecting the three power plants to natural gas and at a later stage the distribution

network could be extended for other uses.

Export Options

Since countries in the region will have quantities of gas that far exceed their current

demand, significant amounts of natural gas will be exported. The natural gas found in

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Israel or Cyprus can be exported either by connecting subsea pipelines to their

customers or by liquefying natural gas.

The gas fields could be connected through a subsea pipeline to Turkey. Turkey’s

demand for importing natural gas is rising rapidly, and it could transfer extra natural

gas to Europe through the existing Turkish gas transport network. This option seems

unlikely due to the political circumstances and the disrupted relations between Turkey

and Israel, and, even more so, between Turkey and Cyprus. Still Israeli executives

have stated that they are assessing the option and Turkish representatives have also

expressed support for the idea which may be feasible both technically and

economically. Theoretically, the gas could have been transferred to Turkey through

Syria but obviously, this option is not realistic today due to the internal Syrian conflict

and the relations between Israel and Syria. Another possibility is to connect a pipeline

from Israel to Jordan if the demand is sufficient and if the relations between the

countries make it possible to close a deal to sell natural gas to Jordan.

The gas could also be transferred to Greece via a pipeline. A pipeline connecting the

gas fields to Cyprus and from there to mainland Greece through the Greek island of

Crete would be the longest and deepest in the world and hence would be very

expensive. Moreover, the plan would be costly because Greece has no natural gas

infrastructure. Therefore, the pipeline would probably be worthwhile only if it could

transfer both Israeli and Cypriot gas. The project was submitted to the EU and is

currently being examined. However, any plans of Cyprus's to lay pipelines may also

be complicated by Turkey’s continental shelf claims. According to Article 79 of

UNCLOS all states have the right to lay submarine cable and pipelines on the

continental shelf of another state, however “the delineation of the course for the

laying of such pipelines on the continental shelf is subject to the consent of the coastal

33

State”. This clause may be used in legal challenges concerning trans-boundary

pipelines in the region.

Figure 4: Proposed pipeline between the discovered gas fields and Greece

If constructing pipelines turns out not to be economically viable, liquefying the gas

may be a more realistic option. It would be possible to connect the Leviathan and

Aphrodite fields and then transfer the gas from both fields to the same facility.

Liquefaction could take place either at an onshore LNG facility or in a floating facility

(fLNG). The most probable locations for an onshore facility in Israel are Eilat,

Ashdod and Ashkelon. Building the facility in Eilat would allow the developers to

export the LNG to Asia without being dependent on Egypt for the Suez Canal

passage. Constructing such a facility is a huge project, and it could create thousands of

jobs, but it would also take up significant public space and impose environmental and

security risks. The Ministry of Environmental Protection has already voiced its

objection to such a project in Eilat since the facility would need to be kept several

kilometers away from other civil uses of land, and the current proposal places the

facility only 600 meters away from people’s houses.

34

The private developers would prefer to build the LNG facility in Vasilikos, Cyprus.

Cyprus is reviewing this option and has allocated land and carried out environmental

impact studies and risk assessment studies. The gas could also be liquefied in Akaba,

Jordan or in Egypt pending the political situation there. The Israeli National Security

Council has voiced its objections to an export facility outside Israel’s territory due to

concerns of strategic dependence on other countries. The Inter-Ministerial Committee

to Examine the Government's Policy Regarding Natural Gas in Israel stated that there

is an absolute preference not to use a facility outside Israeli territory or economic

waters, and that export from facilities outside the country should be permitted only in

the framework of bilateral agreements between countries.

Another option is to liquefy the gas offshore. This idea is tempting for energy

companies since it would enable them to circumvent the long authorization process

and local objections to an onshore facility and thus accelerate construction. However

fLNG is a very new technology which has yet to be tested; the first such facility is

being constructed by Royal Dutch Shell and will be completed in a few years. Noble

Energy is considering exporting the gas from the Tamar Field using an fLNG terminal

and has already signed a memorandum with Daewoo Shipbuilding concerning the

construction of the terminal and a letter of intent with Gazprom on selling the LNG.

The development of gas infrastructure depends on the export market available for the

region. The two main options are the European and East Asian markets. In Europe,

the production of natural gas is diminishing and, according to the International Energy

Agency (IEA), the production in the EU27 is expected to decline from a current level

of 215 BCM to 100 BCM by 2030. Therefore, the need to import natural gas will rise.

However, large parts of the European market are already over-supplied, mostly with

gas from Russia. A market may still be able to be developed since some regions are

35

not receiving enough natural gas, especially in south-eastern Europe, and because

Europe may prefer to diversify its energy suppliers.

China uses natural gas for only 4-5% of its primary energy consumption and relies

heavily on the Middle East for natural gas imports. There is potential for significant

growth in Chinese natural gas imports and for diversification of its gas sources since

the country puts emphasis on energy security. Therefore, China would probably like a

stake in the new gas discoveries. From the developers' point of view, China is an

attractive customer due to its huge market. However, importing the gas in LNG form

may be too expensive for China since the gas prices there are often coupled to coal

and are relatively low. Furthermore, despite its interests in the region, China may not

be willing to sacrifice its relations with Iran to deal with Israel, for geo-political

reasons and since Iran exports oil which is more valuable for China than LNG.

Japan and South Korea are willing to pay higher prices for natural gas and are

therefore possible customers. Yet, once Australia’s rising export of natural gas is

taken into account, along with possible LNG exports from the USA and Canada in the

second half of the decade, the Asian markets also seem quite saturated in the future.

36

Figure 5: Prospective markets for gas in the Levant

There is a realistic possibility that there will be a glut of gas becoming available in the

next 5-10 years, as a result, among other reasons, of new discoveries in east Africa

and increased shale gas production in North America; this will generally lower natural

gas prices. Since the cost of LNG plants is not expected to decline, the construction of

LNG may be less cost-effective and in such a case the region may have to rely on

pipelines or use the gas mostly for domestic purposes.

To conclude, the countries in the region have more natural gas than they currently

need, and gas will most likely be exported either by pipeline or liquefaction, but while

Asia seems like a possible target in the short run, it is not yet clear who will be the

consumers of the new discoveries in the long run.

37

Socio-Economic Aspects

Abstract: Most domestic demand for natural gas is expected in the power sector which so far

has been almost completely dependent on the imports of natural resources. Natural gas will

not only lower electricity prices, but will also produce less air pollution and reduce

greenhouse gas emissions. In addition, natural gas may be used in the manufacturing

industry, the transportation sector (using CNG, methanol or GTL technologies), in the

process of producing shale oil and exported. Supporters of exporting gas argue that the new

natural gas discoveries satisfy the local demand, that exports are required in order to attract

developers and that exporting gas is often more efficient than using it locally. Objectors claim

that the supply of natural gas in the local market will create demand, that natural gas should

be reserved for at least 50 years and that preference should be given to local use for

environmental reasons. The natural gas market will also need to be regulated and taxed.

There is significant risk of the formation of monopolies, especially in supplying the local

markets, and therefore regulators will need to encourage competition or control prices. One

decision that has already been made in Israel is to tax the natural gas profits. The profits will

be invested abroad by a new dedicated wealth fund, in order to prevent major changes in the

exchange rate which may hurt the competitiveness of the manufacturing industry.

Once the technical infrastructure is developed, the natural gas can be consumed

locally by various economic sectors, it can be used as an input for producing shale oil

and it may be exported in order to maximize profits. In Cyprus alone, the gas revenues

may amount to 100 billion euros and it is not surprising that the gas discoveries have

sparked much hope in that country which is facing a severe financial crisis. The huge

benefits of the discovered natural resources will be determined not only by deciding

how the natural gas will be used, but also by the distribution of the gas profits

between the natural gas developers and the public. The possible uses of natural gas,

the profits to be derived from it and the regulation of the natural gas market will be

discussed in this section.

38

Domestic Demand

Gas is expected to be used for three main purposes: electricity, industry and

transportation. The market penetration of natural gas in Israel occurred in 2004 and by

2011 Israel consumed approximately 5 BCM of natural gas, 90% for power

generation and the rest for industry. According to the Energy and Water Ministry,

consumption is expected to rise to 12.5 BCM in 2020, 18 BCM in 2030 and 27.1

BCM in 2040. The accumulated consumption predicted in the years 2012-2040 is 500

BCM.

The most urgent use for natural gas is obviously for production of electricity. In 2003,

Israel consumed no natural gas and its power generation relied mostly on coal and, to

a lesser extent, on oil. By 2010, 40% of electricity was generated using natural gas.

According to the prediction of the Energy Ministry, 60% of electricity will be

generated from gas in 2027, and 68% in 2040. Other forecasts predict that by 2020 the

share of natural gas in power generation may rise to 70%. The extremely quick

transition to natural gas offers significant benefits. The price of natural gas is much

lower than that of other fossil fuels and it pollutes less. The transition to gas reduces

air pollution which poses serious health concerns in the country.

The developers of the Tamar gas field have already signed a contract with the Israeli

Electric Corporation to sell natural gas for 15 years. The agreement drew criticism

since it was claimed that the developers used their monopoly status to sell the gas at

prices higher than the market price. Eventually the Electricity Authority and the

Israeli Antitrust Authority approved the agreement but only after modifying several

clauses, claiming the changes will save the Israeli public NIS 1 billion. The Antitrust

Authority also intervened in gas agreements with power companies in order to ensure

that there would be capacity left in the gas pipeline for future agreements with other

customers and suppliers. However, so far, the regulators have not intervened directly

39

in natural gas prices. In May 2012, the Price Committee recommended subjecting the

natural gas prices to oversight and it is not clear if this recommendation will be

implemented. Since the developers of the Tamar field will provide the vast majority of

natural gas in the coming years, the government will have to continue its oversight of

the market using various mechanisms, and ensure that gas is also delivered to small

and medium businesses at reasonable prices.

Natural gas usage in the power sector is especially important in Cyprus as an EU

member with binding commitments to reduce greenhouse gas emissions. The country

also experienced power shortages after the 2011 Evangelos Florakis Naval Base

explosion, which reminded Cypriots of the importance of a reliable energy source.

It is expected that over the years natural gas will also be used more widely in the

transportation sector and that in 2040 approximately 15% of Israel’s natural gas usage

will be consumed directly in transportation (in addition to electric cars which will also

consume natural gas indirectly). Compressed Natural Gas (CNG), a veteran

technology which is already used by millions of cars, mostly in the Asia Pacific and

Latin American regions, offers a cheaper, environmentally cleaner and less noisy fuel

compared to gasoline. CNG can be used in public transportation; however there is a

risk for greater damage in case of a terrorist bombing. Another disadvantage is the

heavy costs associated with building the infrastructure to transfer the gas to stations

throughout the country.

Another option is to use methanol, a synthetic alcohol fuel which can be produced

offshore as a fuel for cars. Currently methanol is used in cars mostly in the Chinese

market and is commonly mixed with conventional fuel. Methanol is less energy-

intensive and may require refueling the car more often. An advantage of methanol is

that it can be produced from various materials including bio-mass and therefore the

infrastructure would not depend only on natural gas.

40

A third option is to convert the gas to liquid fuels, such as gasoline or diesel; the

process known as gas to liquid (GTL) has been proven to work on a commercial scale.

Recently the largest GTL plant in the world was built in Qatar. The main advantage of

GTL is the ability to continue using the same infrastructure for fuel transportation, gas

stations and car fleets. Currently the conversion process is still not very efficient but

in the future GTL may become widespread.

Israel and Cyprus can take advantage of their small size and serve as worldwide

models for shifting their car fleet to natural gas.

Shale Oil

The natural gas may also be used to assist the development of the new oil shale

discoveries in the region. Shale oil, produced from oil shale rocks, and heavy oil are

generally called unconventional oil since they do not come out of a well naturally

under their own pressure. In some cases this oil is not buried deeply and can be found

at depths less than 500 meters under the surface.

“The USA has the largest oil [shale] deposit in the world, but the second largest is in Israel

and Jordan. These are sister deposits and there are about a trillion barrels of oil between them.

Israel alone has over 250 billion barrels of oil, and they are quite producible at prices that are

cheaper than the Arctic's very deep water. This is a resource that is today quite economic.”

Dr. Harold Vinegar

The Israeli reserves are of high quality. Most of them lie in Israel proper, in the Shfela

Basin, the Beer-Sheva Basin and the Hadera Basin. A significant amount also lies in

Palestinian territory in the Jenin Basin. Israel has granted oil shale rights to four

companies in the Rotem and the Shfela regions, including the Israel Energy Initiative

(IEI) company for a pilot project to produce shale oil in the Shfela. IEI is hoping to

produce oil commercially by the end of the decade. Jordan has signed memorandums

41

of understanding with companies for shale oil production and is planning construction

of an oil shale power plant. Israel and Jordan are also in early stages of negotiations

regarding potential cooperation in oil extraction in order to increase profits.

The demand for oil in the global market is constantly growing due to population and

economic growth in developing markets. Limited conventional oil supplies are not

able to keep up with demand and thus oil prices have increased. Since oil is still rare

in the world, in contrast to coal and natural gas, the prices are not expected to drop.

The higher oil prices make the costly extraction process of shale oil worthwhile.

Figure 6: Unconventional oil reserves

Besides the low energy returned on energy invested ratio, one of the main

disadvantages associated with shale oil is the environmental damage in terms of

waste, water usage, air pollution, CO2 emissions and land use. An environmental

improvement may be achieved with the in situ conversion process, developed by

Shell, which will be used in the IEI pilot. In the process, oil shale is heated in the

ground and converted into liquid in horizontal wells instead of mining the shale oil

like coal and heating it above ground (the traditional process is being explored in the

42

Rotem region). In-site conversion will leave the carbon underground and save energy.

Theoretically, with extremely efficient heating devices shale oil extraction may even

emit slightly lower carbon dioxide emissions than conventional crude oil. However,

the technology is still in the development phase.

While in-site conversion holds environmental benefits, it also carries risks such as

groundwater pollution. Israeli environmental organizations have objected to the

production of shale oil claiming that the process is energy intensive, constitutes a risk

to public health, and harms the local environment. They explain that the technology

has not yet been tested commercially and that thorough environmental reviews are

needed before authorizing production. Environmentalists fear that it will be

impossible to stop the commercial project after pilot production begins.

Israel is fortunate since natural gas is necessary to heat the shale oil trapped in shale

stones. The gas arriving in Ashdod will be very close to the Shfela Basin and Israel

has the basic infrastructure to transport and export oil, although a new refinery may be

needed for shale oil. Oil shale extraction using natural gas is economical due to the

price difference between oil and natural gas which is expected to continue growing in

the coming years. Having both oil shale and natural gas could make Israeli industry

self-sufficient and help the country become energy independent.

Export Share

Exporting natural gas does not only pose a technical challenge but also has social and

economic aspects. In order to formulate national policies for the development of the

natural gas sector in Israel, the Natural Gas Inter-Ministerial Committee (the Tzemach

committee) was created in October 2011. The main goals of the committee were

ensuring energy security, ensuring domestic competition, leveraging the

environmental benefits of gas use and maximizing Israel’s economic and political

43

benefits. The committee submitted its recommendations to the government in August

2012.

One of the important decisions in national gas policy is the share of gas which should

be devoted solely to domestic use. While the committee estimated that Israel’s total

gas reserves will amount to 1480 BCM, it based its recommendations on available

natural gas. The available gas includes reserves and contingent resources (800 BCM)

and prospective resources with 90% probability (150 BCM). The committee

recommends that 450 BCM of the total 950 BCM available be dedicated to the

domestic market for 25 years and that gas export be limited to 500 BCM, 53% of the

available natural gas. The committee also recommends that lease owners of gas fields

will have to supply the domestic market with a significant share of their reserves. The

reserved share will be proportional to the size of the gas fields and will reach 50% for

the biggest gas fields (lease owners will be able to trade their export quotas).

The recommendations attempted to prioritize the needs of the local market while

permitting natural gas exports. Since the potential supply of natural gas greatly

exceeds the local market demand, it is claimed that exporting gas is required to attract

major international gas companies and develop more gas fields; this will also result in

increased competition. Furthermore, supporters of exporting the natural gas argued

that it is often more efficient to export the gas rather than use it locally in order to

subsidize a new industry. The recommendations stirred controversy and the Ministry

of Environmental Protection's representative in the committee objected to the

recommendations in a minority opinion. The Ministry claimed that it was too early to

allocate gas for export when there is still great uncertainty regarding the available

natural gas reserves. In addition, those objecting to the recommendations claimed that

the local market might use much more natural gas than the projections of the

committee, especially in the transportation sector, and that natural gas use has

44

important environmental benefits for the country. Furthermore, critics claimed that the

committee’s foresight of only 25 years was too short for the energy market and that

supply should have been ensured for 50 years. Environmentalists argued that the

committee risks returning the energy market to expensive and polluting oil and coal

resources after 25 years.

Distributing the Profits

There is no doubt that the gas discoveries will create huge profits, but it is not clear

who should enjoy these profits - the private developers who took risks and found the

treasure or the citizens of the country to whom the natural resources belong. Will the

resources be used to narrow the gaps in society or to reward a small group of

developers?

The Committee to Examine the Fiscal Policy on Oil and Gas Resources in Israel

headed by Prof. Eytan Sheshinski (the Sheshinski Committee) was created to discuss

the distribution of oil and gas profits and draw up recommendations regarding the

taxation of the natural resources. Since Israel did not have significant natural

resources previously, the tax on oil and gas exploitation was very low and needed to

be updated after the new discoveries. The committee’s work stirred a vocal public

debate for and against the increased taxes, which even included a personal smear

campaign against Sheshinski. The committee released its final recommendations in

January 2011 and those were approved by the Knesset in March 2012. In August

2012, the Israeli Supreme Court rejected several appeals against the Sheshinski Law.

According to the Sheshinski Law, the rate of royalties on natural resources will

remain 12.5%. In addition to the royalties, a new progressive tax on profits was

imposed. The tax will equal 20% to 50% of the natural gas profits according to the

amount of excess profits. The companies will start paying this tax only once they have

recovered 150% of their expenses. As a result of the new taxes, the State’s share of

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the overall net profits will increase from one third to 52%-62%. The committee claims

that the recommendations will allow the country’s citizens to enjoy its resources,

while allowing the developers to receive reasonable returns on their investments and

providing incentives for entrepreneurs to develop the gas fields.

After it has been decided that the country will enjoy a substantial share of the gas

profits, a second issue is how to use these profits. Should the profits be used at once or

saved for the long term? Should the profits be used to lower the country's debt, for

new infrastructure projects, for environmental protection, or perhaps for security

needs?

One of the considerations in the use of the profits is to avoid the “Dutch Disease”. The

term describes situations in which a large natural resource discovery strengthens the

country’s currency and thus increases the cost of export products, making the

manufacturing industry less competitive. The "disease" may infect employment since

the capital-intensive gas industry does not employ many local workers compared to

the manufacturing industry. The term was named after the decline of the Dutch

manufacturing industry following the discovery of natural gas in that country. In

addition, decision makers will need to take into account the limited timeframe of

natural gas profits.

“There is huge potential to improve or to increase the economic welfare of the countries and

the people in our region, but we know that the use of natural resources for improved welfare

is effective for a limited time. Therefore, it is most advisable to use these resources in order to

allocate them to infrastructure and targets that will have a long-term impact, for example

education.”

Dr. Roby Nathanson

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The Israel government has decided to set up a natural gas wealth fund for natural gas

profits. The planned fund is expected to begin receiving money starting in 2018 and

its total revenue is predicted to reach 80 billion dollars by 2040. It will invest the gas

profits outside the country, to prevent major changes in the exchange rate.

Approximately 3-4% of the fund’s assets will be spent on designated domestic

projects according to the governments’ decisions (probably education and security).

The government may be able to borrow more money from the fund in cases of

emergencies such as an earthquake or war and the Knesset could decide to turn such

loans into grants. The proposal has not yet been authorized and many Knesset

Members claim that the fund’s objectives should be defined by law and that the profits

should not be used for security purposes, while the Ministry of Environmental

Protection demands that the profits also be used to oversee gas production and prepare

the country for the possibility of an environmental disaster. It is crucial for the country

to be very transparent in handling the fund, to ensure that the current and future

generations benefit from the gas profits.

Cyprus is also considering the option of setting up a wealth fund for its gas profits.

The government has asked for the assistance of the IMF in studying the topic and is

learning from the successful experience in Norway. However, in addition to all the

challenges faced by Israel, the Republic of Cyprus will also have to decide how to

fairly share the gas profits with Northern Cyprus. So far Cyprus has not been willing

to negotiate such an agreement.

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Geo-Political Considerations

Abstract: Any major energy discovery has important strategic implications. The most obvious

impact is that the countries in the region will lower their dependency on foreign energy.

However, the countries’ energy security will still be threatened since the new discoveries do

not offer diversity of energy sources (at least until oil is discovered). Any country relying on

the new natural gas fields will be prone to power disruptions in the case of technical

accidents, natural disasters or terrorist attacks. Therefore, precautionary measures may be

needed in case gas does not flow. The discoveries will also impact the relations with countries

outside the region. Europe has witnessed growing dependence on Russia for natural gas and

has an interest in diversifying its energy sources. While it is likely that the EU would welcome

natural gas produced in Cyprus, natural gas agreements with Israel may depend on political

concerns. Russia obviously has less of an interest in new competition in the natural gas

market. The country hopes that most of the gas will be consumed within the region. If the gas

is exported, Russia prefers the exports to target the Asian market and would like to take part

of the project.

The discovery of natural gas is of such importance that its implications will not be

confined only to the socio-economic realm. The new natural resources are already

having strategic implications for the region, and such implications are expected to

grow in significance.

“This enormous undersea bonanza constitutes a strategic game-changer; it will lead to a

complete change in the geo-strategic situation in the region. Now it is up to the region’s

stakeholders and their international partners, to turn this energy bonanza into a blessing or

into a curse. It can serve as a trigger for more tension and conflict or as an engine of economic

and social development and can be turned into a chance for peaceful regional cooperation.”

Dr. Ralf Hexel

This section will present the strategic context affecting the region, the importance of

energy security and the position of two central players with influence on the region:

Europe and Russia.

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Background - Strategic Context

The strategic implications of the gas discoveries are connected to the region’s

strategic context.

“The strategic context in the Eastern Mediterranean is characterized by uncertainty, changes

in the regional balance of power and tremendous political instability. The important

developments over the past few years include: the Arab Spring, the Iran nuclear crisis, the

new strategic role of Turkey, the Syrian conflict, Turkish-Israeli tensions, the Euro crisis,

European inward-lookingness, Russian posturing, global resource security concerns and

perhaps the United States disengaging.”

Dr. Rem Korteweg

The Arab spring has already led to deterioration in the Israel-Egypt relations, and

eventually terminated the supply of Egyptian gas to Israel. This emphasized the risk of

energy dependence and accelerated the development of Israel’s gas fields. In addition,

it is still not clear how the relations between the EU, the United States and Egypt will

evolve under the new regime. Therefore, Turkey has become a much more important

ally for Western countries to retain their influence in the Arab world and serve as a

model for how Arab revolutions could develop. As a result, the US and EU are much

less willing to put pressure on Turkey especially since Turkey also has an important

role in managing the Syrian conflict. The new strategic role of Turkey and its

impressive economic growth can explain the growing assertiveness in its foreign

policy.

The Euro crisis threatens Greece and is a great cause of concern for Cyprus which is

strongly connected to the Greek economy. Cyprus received a three-year loan from

Russia in 2011 at a below-market interest rate. In mid-2012, Cyprus asked for a

second loan from Russia for 5 billion Euros and sought a bailout from the troika (the

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European Commission, the European Central Bank and the IMF). If Greece leaves the

EU, there is a real risk that Cyprus will default due to Cypriot bank exposure to

Greece and this will most probably delay gas developments.

The Euro crisis not only creates a difficult financial framework for the tremendous

investments needed to develop the gas fields, it also leads to Europe’s inward focus.

European policy makers are not currently concerned with the gas in the Levant which

may flow to Europe in several years, but are bothered by the fact that there is a real

possibility of the Euro collapsing in the near future.

When decision makers in Europe deal with the region, the Syrian conflict is a much

more urgent and important concern. The continued escalation of the conflict is already

impacting Lebanon and may delay gas exploration plans. A possibility also exists that

the Syrian regime may try to drag Israel into the conflict.

Similarly, with the withdrawal from Iraq, the United States is disengaging gradually

from the Middle East and directing its foreign policy focus towards the Asian-Pacific

region. The United States is still involved in the Eastern Mediterranean, and has

economic interests with Noble Energy as the dominant gas company in the area, but

the actors in the region probably should not expect the US to be the significant power

broker the region has grown accustomed to.

Energy Security

The new oil discoveries could provide energy security to countries that were, until

recently, almost completely energy dependent on outside sources. The dependence on

energy is especially a strategic threat for Israel due to the OPEC monopoly. The gas

bonanza, not only in Israel but all over the world, may break OPEC’s cartel. Currently

the world is dependent on oil mostly because there is no suitable substitute for it in the

transportation sector and most of the conventional proven reserves are in the Middle

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East with a very significant share controlled by OPEC countries. However, the

dependence on oil may change with the use of gas in the transportation sector. The

Alternative Fuel Administration was created in Israel’s Prime Minister’s Office in

order to promote the Oil-Free Initiative with the ultimate goal of “reducing the

world’s dependence on oil in transportation”. One of the main targets is increasing

the use of natural gas in the Israeli transportation sector which can serve as a model

for other countries.

Still, the natural gas discoveries create new energy security risks. One of the basic

principles of energy security is diversification of energy sources, and depending solely

on natural gas goes against this principle. As Israel, Cyprus, and other neighboring

countries rely more and more on natural gas they will also be prone to threats to the

gas infrastructure.

“For the next 5 years, Israel is going to be solely dependent on 1 field, 5 producing wells, 1

pipeline, 1 treatment facility offshore, 1 entry pipeline and treatment facility in the civil

terminal in Ashdod, for producing 70 percent of the electricity, supplying the industry, and for

other uses.”

Dr. Amit Mor

The gas flow could be threatened by technical hitches; almost every platform or field

encounters technical problems at some point or another. A second possible threat is

earthquakes, which are likely in the region. In any of these scenarios, Israel or Cyprus

may experience a blackout if the national power system relies mostly on gas.

A third threat, and perhaps most significant, is military. The Aphrodite field could

easily be damaged by Turkey, the Mary B and Noa fields are within the range of

Hamas missiles, and the Leviathan and Tamar fields are within Hezbollah’s missile

range. Israel also fears missiles from Syria and terrorist acts which could sabotage

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production, for example by crashing a plane on a drilling facility. The Israeli army is

aware that it will have to protect the production and exploration fields. Drones have

already been used to protect the northern fields and the navy will devote a substantial

share of the operations of its missile boats to patrolling and defending the fields.

Countries will have to take precautionary measures in case gas does not flow. These

measures may include dual fuel power stations, emergency gas reserves and the

ability to import LNG at need. In addition, they will need to develop more than one

field, pipeline and treatment facility in order to not rely completely on one component

for gas delivery.

Europe and the Region

In 1975, a European directive forbade the use of natural gas in electricity generation

in order to reserve the gas for premium applications and, for 16 years, it was not

permissible to build new capacities for power plants burning gas. However, the

restriction was canceled in 1991 and since then the share of gas in Europe’s electricity

production has grown significantly. Today gas represents 25% of Europe’s energy

demand. Europe’s energy requirements are expected to grow, and the demand for

natural gas will grow at a higher rate than the general demand for energy due to its

price and environmental advantages.

“The demand for energy will continue to increase in the world because the population is

growing and since more people want to increase their quality of life. It is impossible to have

growth without energy… In Europe we are developing more and more the use of gas. Thanks

to gas shale, tight gas and coal bed methane, the world has more than 250 years of gas

reserves. We had 70 years of reserves only a few years ago. Gas is the energy of the 21st

century.”

Prof. Samuele Furfari

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Europe is currently dependent on Russian gas for 35-40% of its energy production.

While European officials claim that they trust their partner and do not have

fundamental disagreements with Russia, Russia has shut the gas off before, due to

disputes with Ukraine on natural gas prices. The most severe disruptions were in

January 2006 and January 2009. In each case the gas flow to Europe through the

Ukraine was stopped or reduced. The effect was felt immediately in several European

countries. The gas disputes have political roots and the Russia-Ukraine divide may

also be a factor explaining the shut-offs. Russia’s assertive foreign policy may make it

risky for the EU to rely on it so heavily for natural gas.

In order to ensure that future disputes will not affect Europe, the new North Stream

gas pipeline, the longest subsea pipeline in the world, has been opened between

Russia and Northern Germany through the Gulf of Finland. The planned South Stream

pipeline will connect Russia to Bulgaria through the Black Sea. The pipelines connect

Russia directly to the Union without passing through transit countries; consequently

they also increase the dependence on Russia as the main energy supplier of the EU.

One option considered for the diversification of Europe’s natural gas sources is

constructing the Nabucco pipeline between Turkey and Austria. The pipeline which

could bring gas from Azerbaijan to Vienna is considered a competitor of the South

Stream. However, the project has run into difficulties and it is still not clear if it will

be built. Another diversifying option is to buy gas from the Eastern Mediterranean in

order to ensure future energy security. Therefore, the EU is starting to view the Levant

Basin as a strategic energy area of interest and would like to ensure that at least some

of the natural gas in the region will reach Europe.

In 2010 the EU had 21 countries supplying gas to the Union, but only nine of the

countries were member states, and therefore the EU will be especially inclined to buy

gas from Cyprus. Since the EU is increasing its regasification capacity, it is also

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reasonable that Europe will buy LNG from the region if a pipeline from Cyprus to

Greece is not constructed. Already 25% of the natural gas arriving in the EU is in

liquid form.

The relations with Israel are, unsurprisingly, more complex. The delimitation

agreement between Israel and Cyprus also defined in essence a maritime border

between Israel and the EU. The gas discoveries may strengthen EU-Israeli relations.

However, they may also be used as a political tool. Currently the ties between the

actors are often strained because of political concerns. For example, the Agreement on

Conformity Assessment and Acceptance of Industrial Products (ACAA) with Israel is

blocked in the European Parliament for political reasons. The agreement would reduce

technical trade barriers between the parties and facilitate trade, especially in

pharmaceutical products. Just as European parties are using the agreement to pressure

Israel on the settlements and on the Gaza Flotilla, natural gas agreements may also be

used in the future for political purposes.

In addition to natural gas, the EU has an interest in mediating tensions created by the

gas discoveries. The cooperation between the EU and NATO has faltered because of

disagreements over Cyprus, and the relations between the organizations could get

worst with growing tensions between Turkey and Cyprus over the gas finds. A third

interest for the EU in the region is freedom of transport and commerce. The EU would

like to make sure that maritime territorial disputes in the region do not disrupt the

region’s normal transport and commerce, which are considered a crucial cornerstone

of prosperity. The EU can promote its interests in the region by providing knowledge

and using its experience in market regulation and environmental risks to assist the

regions’ countries in developing their own energy markets.

One arena for cooperation between the EU and the region is the Energy Committee in

the Union for the Mediterranean (UfM). The Union was created in 2008 in the

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framework of the Barcelona process and it includes the EU states and countries from

the Mediterranean basin. Though the UfM suffers from political disputes, especially

the Arab-Israeli conflict, the Energy Committee has been able to continue working

professionally and will remain a prominent committee in the UfM. One of the

committee’s flagship projects, the Mediterranean Solar Plan launched in 2008, aims to

assist countries in the south shore of the Mediterranean to develop power generation

capacities based on renewable energies. Most of the electricity produced should be

used locally while the rest will be exported to the EU. This project can be seen as

competing with the natural gas fields, and developers of the fields will have to be

cost-effective in order to penetrate the EU market. Nevertheless, renewable energy

projects and natural gas can also be seen as complementing each other. Natural gas

has the advantage of providing rather predictable constant energy and is not dependent

on the specific weather, while renewable energy is not only environmentally

important but also provides crucial diversification and thus increases energy security.

Russia’s Perspective

In order to understand Russia’s energy interests, it is essential to analyze Gazprom’s

actions. Gazprom is the largest gas extraction company in the world and is majority-

owned by the Russian government. While less than a third of Gazprom’s gas is sold to

Turkey and Europe, 51% of gas revenues arrive from those regions, and Gazprom will

not be interested in competition from Eastern Mediterranean gas. Therefore, it is

swiftly promoting the North Stream and South Stream pipelines, in an attempt to tie

consumers to long-term “take-or-pay” gas contracts. In such contracts the consumers

agree to buy a certain volume of natural gas and pay a fine if they do not take the full

amount. Consumers who have invested in the pipelines and signed such agreements

will be less inclined to promote new large projects from other regions. The contracts

are tied to oil prices which are not expected to decline significantly in the future and

thus promise stable revenue.

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To make sure their energy interests are promoted in the region, Gazprom has recently

signed a letter of intent with the developers of the Tamar field to buy almost all the

LNG offtake. So far Russia has not been a big LNG exporter and has relied on

Gazprom's possession of the largest gas transport system in the world. Putin called for

an LNG strategy in March 2012 targeted at the Asian market. The agreement with

Gazprom is non-binding, but it has been reported that Gazprom representatives are

eager to close the deal in the near future.

“Russia wants to control the flow of gas, the price and the almost total exclusivity that they

have for supplying Europe.”

Dr. Oded Eran

Russia has several spheres of influence in the region to ensure future energy interests.

First of all, Russia has strong economic ties with Cyprus. In addition to the loan given

to Cyprus with fewer conditions than European bailouts, there is a large share of

mutual direct investment between the countries. Russia has also supported Cyprus in

its dispute with Turkey. Moreover, Russia exerts a cultural influence in the region due

to the many Russian expatriates in Cyprus and in Israel, and key political figure in

Cyprus and Israel studied or grew up in Russia.

“Russia seems to have decided: if you cannot beat them, join them. They want to make sure

that the gas does not reach the European market. It would be best for Russia if Israel would

use the gas in its own market and export it to Asia, and if the gas is exported to Asia it would

be best if Russia takes part in it.”

Jonas Grätz

Some commenters have argued that Russia might even be willing to accept Israel’s

position regarding Iran’s nuclear program as part of a bargain which would include

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Russia’s participation in developing the natural gas reserves. However, such a

scenario does not seem likely since Russia has geo-political interests in Iran and the

country would not be willing to make security policy concessions for energy.

Furthermore, the rise in oil prices caused by the tension with Iran may actually favor

the Russian economy.

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Casus Belli or Regional Cooperation?

Abstract: The new natural gas discoveries have strategic implications within the Eastern

Mediterranean region. Turkey is worried that the delimitation of the Mediterranean and

increased cooperation between Israel, Cyprus and Greece will diminish its role in the region.

Turkey responded aggressively to Cyprus drilling, it signed an energy agreement with the

Turkish Republic of Northern Cyprus and then sent an exploration ship, accompanied by

frigates and jets, to an area overlapping with license blocks issued by the Republic of Cyprus.

It seems as if the negative impacts on the Israel-Lebanon relations are less dangerous at this

point. While both sides have used warmongering rhetoric, the military threats have reverted

to legal arguments, and the dispute has been limited to a specific territory. Still Israel fears

that the disputed territory will serve as an excuse for an attack by the Hezbollah, similarly to

the Shabaa farms, while Lebanon worriers that Israel is trying to create a new maritime

buffer between the countries similarly to the security zone. The gas discoveries also had

positive strategic impacts in the region and the best example is the Cyprus-Israel relations.

Both countries have an interest to cooperate in developing the gas fields, in order to attract

investors, maximize profits and share infrastructure. Unsurprisingly, Israel-Turkey relations,

which have already deteriorated after the Turkish flotilla to Gaza, may grow worse due to the

close cooperation between Israel and Cyprus.

After focusing on the geo-strategic context and the implication for the major powers

outside the region, it is important to analyze how the new discoveries will affect the

relations between the countries within the region.

Negative Influences

History teaches us that tensions can rise in areas that have been relatively quiet once

resources are discovered. Such has been the case in the South China Sea where

warmongering rhetoric is characterizing the dispute between China, Vietnam, the

Philippines and Malaysia over the Paracel and Spratly islands and their surrounding

waters, which are presumed to hold large natural gas and oil reserves. The Middle

East is already characterized by increased securitization of various issues and the

zero-sum thinking regarding natural resources may raise tensions further. The

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discoveries have had negative influence on the Cyprus-Turkey, Israel-Lebanon and

Israel-Turkey relations. Each of these cases will be discussed in this section.

Cyprus – Turkey

Turkey has become an important regional power over the past decade. Some of

Turkey’s power stems from its position as a geo-political hub, and the country would

like to become an energy hub. Delimitation of the Mediterranean and increased

cooperation between Israel, Cyprus and Greece will diminish Turkey’s role in the

region. In addition, Turkey’s energy needs are rapidly increasing and it wants to

ensure for itself some of the natural resources found in the region. That is why the

unilateral Greek Cypriots' actions are so problematic in Turkish eyes – not only

because they do not represent the entire Cyprus Island and violate the Turkish

Cypriots' rights, but also because they threaten Turkey’s regional power and may

prevent energy resources from reaching the country.

As mentioned in the first section, there are territorial disputes between Turkey and the

Republic of Cyprus and between the Greek and Turkish Cypriots. So far, the sides

have not come to the table to negotiate the disputes. The Republic of Cyprus is

benefiting from the new status quo and attempting to explore and produce

hydrocarbons as quickly as possible. For Greek Cypriots the gas discovery may even

be used as leverage in future negotiations. Conversely, Turkey has issued calls to stop

all activities until a settlement is reached or to bring the two sides to negotiations

exclusively on this issue with the participation of the UN.

Turkey has been using threats to promote its interest and stop Cyprus. It stated that it

will not allow drilling in the disputed area and that it will even respond to drilling in

the Aphrodite field. Since then Turkey has carried out provocative maritime military

exercises in the region. Furthermore, Turkey declared that it will not allow

international companies which operate under the Republic of Cyprus’s disputed

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concession blocks to take part in future Turkish energy projects. Turkey also sent

frigates and jets to accompany the Piri Reis Turkish ship exploring an area which

overlaps with Block 12 where the Aphrodite gas field is located. The area was

licensed by the Turkish Republic of Northern Cyprus and Turkey has argued that it

will support the Turkish Cypriots under its responsibility as the guarantor power of

the TRNC.

The relations between the countries also affect Turkey-EU relations. In July 2012,

Cyprus took over the presidency of the EU for six months. Turkey has already

announced that during this time it will partly freeze relations with the EU and boycott

the presidency.

So far Turkey has not been able to stop Cyprus's exploration and drilling activities but

further escalations may drive international companies away, prevent Cyprus from

producing natural gas, and deny any possibility of Turkey entering the EU. Despite

the growing tensions, a solution seems possible and perhaps the economic crisis can

be used as an opportunity to resolve the disputes. Turkey needs new natural gas

imports and could be a profitable consumer and a gateway to the European market for

Cyprus. It is possible to envisage a future deal trading Turkish water for Cyprus gas.

However, resolving the energy disputes probably depends on finding a more

comprehensive agreement between the Turkish and Greek Cypriots.

“For Turkey, the Greek Cypriots have been pursuing an adventurous policy in the Eastern

Mediterranean through concluding maritime delimitation agreements and conducting oil/gas

exploration and issuing permits for such activities around the island. This is against

international agreements and goodwill and prevents the negotiation process from achieving a

fair and acceptable solution on the Cyprus issue. For Turkey, the Greek Cypriots'

Administration does not represent, de jure or de facto, the Turkish Cypriots and Cyprus as a

whole. As such, the Administration is not entitled to negotiate and conclude international

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agreements as well as adopt laws regarding the exploitation of natural resources on behalf of

the entire island.”

Prof. Mitat Çelikpala

Turkey – Israel

The relations between Turkey and Israel have deteriorated since the Turkish flotilla to

Gaza in 2010. Supposedly, since Turkey does not object to Israel’s right to

hydrocarbons within its EEZ, the relations between the countries should not have been

further harmed by the natural gas discoveries. However, the Aphrodite field which

Turkey threatens to exploit also lies partly in Israeli territory. Turkey does not have a

claim on Israel’s territory but a unitization agreement between Israel and Cyprus

could provide a future point of dispute with Turkey. It is clear that Turkey is not

pleased with the growing Israeli-Cypriot cooperation.

The relations between Israel and Turkey are characterized by increased securitization.

When Turkey froze military cooperation with Israeli following the Gaza flotilla, it

also withdrew from the joint Reliant Mermaid military drill with Israel and the United

States. In 2012, the exercise was held for the first time without Turkey. In addition,

since 2011 a new yearly military exercise named Noble Dina was held between Israel,

the United States and Greece, Turkey’s traditional rival. Reportedly the exercise

included simulating the protection of offshore gas platforms. Furthermore, it has been

reported that Israeli warplanes flew over Cypriot airspace towards the Piri Reis

Turkish exploration ship.

Overall, the gas findings provide another dimension to the already frayed relations

between Israel and Turkey. In the long run, cooperation remains in both countries'

strategic interests for promoting their mutual priorities in the Middle East.

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Cooperation over Syria may serve as an opportunity to mend the relations between the

countries.

Israel – Lebanon

While the legal aspects of the Israel-Lebanon border dispute have already been

described, this dispute also has geo-political implications. When the Leviathan field

was first discovered, there were claims that some of the field was in Lebanon’s

territory. Since then, both countries have demarcated their maritime border, and the

disputed area was precisely defined and does not include any discovered gas fields.

Still, Israel fears that Hezbollah will turn the disputed area into a new maritime

version of the Shebaa Farms, a small territory currently held by Israel and claimed by

Lebanon. The territory has been used by Hezbollah to justify continued attacks against

Israel. On the other hand, Lebanon does not want the territory to become a new

security buffer between the countries, similar to the security zone Israel occupied in

South Lebanon in 1985-2000.

Both sides have been using warmongering rhetoric. For example, Israel’s Minister of

Infrastructure threatened that Israel will not hesitate to use force to protect its gas

fields, and Lebanon’s Ministry of Energy and Water Resources claimed that country

is determined to defend Lebanon’s natural resources and that if Israel violates this

law, it will pay the price. Naim Qassem, second in command in the Hezbollah, stated

that Lebanon will not allow others to enjoy the country’s gas, and will continue

monitoring the situation in order to recover its rights, without regard to the price. It is

reasonable to expect that if Syria and Lebanon do not find offshore natural gas fields

as they hope, the frustration over the resources in Israeli waters will further increase

tensions over the disputed territory.

There is always a risk that strong rhetoric will develop into unexpected military

action, and therefore it is crucial for the sides to find a way to mitigate tensions.

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Fortunately, the military threats have reverted to legal arguments, which were

presented unilaterally to the UN. It is to be hoped that the sides will be able to act

rationally and solve the dispute by an interim agreement, by turning to the UN for a

solution, or perhaps through a joint development project. At the very least, it is

desirable for the dispute to remain limited to a specific territory and only to the legal

domain.

Positive Influence

The President of the European Commission arrived in Cyprus in 2012 and proposed

following the Coal and Steel Community as a model for political reconciliation

through resource sharing. Such a model may be unrealistic today in the region but

concrete proposals to increase energy cooperation are on the table.

“I believe our assistance - the academicians, the technocrats, and the lawyers - can contribute

towards the politicians breaching the strategic problems. We have to trigger initiatives which

can change the politicians and help the people of the region. The prudent handling of the new

hydrocarbon discoveries can guarantee the geo-political stability and safety of the region.”

Solon Kassinis

Israel – Cyprus

The bilateral relations most improved by the natural gas discoveries are definitely the

Israel-Cyprus relations. In February 2011, Prime Minister Netanyahu met with the

Cypriot President Christofias as part of the first official visit to Cyprus by an Israeli

Prime Minister. The leaders discussed a new pipeline connecting the gas fields of the

countries, export options and cooperating to secure the gas fields.

The countries signed energy and security agreements including a search and rescue

deal. The deal allows Israel to use Cypriot air space and territorial waters for search

and rescue missions. In addition, it has been reported that Israel is discussing the

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option of using Cypriot airfields, providing strategic depth necessary in case of

escalation with Iran, and that Israel has given Cyprus security guarantees and might

take part in protecting the Cypriot gas fields. Cyprus is also investigating the option of

importing natural gas from Israel until its fields are developed.

Another project which can further improve the ties between the countries is a

proposed undersea electric power line between Israel, Cyprus and Greece. Currently

Israel and Cyprus are isolated in terms of electricity and do not export or import

almost any power. The plan will increase the countries’ energy security and also fits

in with the EU’s plan of having an interconnected energy market. The 2000-megawatt

cable, termed the EuroAsia InterConnector may be the longest undersea power cable

in the world. An initial agreement to advance the power line was signed in March

2012.

The emerging cooperation between the countries stems from two main reasons.

Strategically, in the wake of the tensions with Turkey, Israel is attempting to promote

a regional bloc of cooperation which will include Cyprus, Greece, Bulgaria and

Russia. Economically, the countries understand that only by cooperation will they be

able to maximize their natural gas profits. Investments in a lengthy pipeline or an

expensive LNG facility are cost-effective if the infrastructure serves the gas fields in

both countries. Therefore, while the countries still have disputes, mostly Cyprus’s

support for the Palestinian cause and Israeli projects in Northern Cyprus, it seems

likely that the relations between them will continue to improve.

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Summary

It is clear that natural gas in the region is a complex multi-dimensional issue. The gas

discoveries have economic, political, legal and social implications. Legally, maritime

borders have to be defined and agreed upon. UNCLOS provides a framework for the

delimitation process but there are still disputes over the countries’ borders in the

region. After a territory has been claimed, infrastructure needs to be set up to develop

the fields. Development of a pipeline and facilities often leads to environmental,

technical and financial objections. Finally when the infrastructure is created, the gas

can be used domestically for electricity, transportation, manufacturing or to develop

other fossil fuels. It may also be exported to other countries, probably to the European

or East Asian markets. The revenue from the taxes on the gas profits can be invested

in the regions' long-term goals and used for social purposes. The entire process

depends on the strategic context: the regions' relations with other main actors in the

natural gas market and relations between the countries within the region.

While each issue was discussed separately in order to maintain a coherent structure,

throughout the sections it is apparent that the legal, political and economic aspects are

all inter-linked. For example, Turkey’s legal objections to the maritime claims of

Cyprus stem from the political situation; Israel will probably not export the natural

gas through Turkey, despite the economic advantage that would accrue, due to the

tension between the countries; and Israel and Cyprus are strategically cooperating

since there are economic incentives for mutual development of their gas fields.

The tensions between the countries could exacerbate the disputes over the gas fields,

but the region would be much better off if these disputes could be resolved through

legal channels and without resorting to the use of force. Tools, such as unitization, can

facilitate increased cooperation between countries, and turn the gas fields into a

positive sum game. The economic need to attract foreign investors may also serve as

65

an incentive for further cooperation. It is even possible to envision future regional

cooperation to deal with energy.

“The European Community for Coal and Steel might be a model for the region. Maybe future

generations will look at maps on the Eastern Mediterranean and see a regional organization

coming up and energy might be the starting point.”

Prof. Stephan Stetter

To sum up, energy can be a blessing or a curse: while oil has often caused misery, for

example, in Angola, it has also created huge benefits for countries such as Norway. In

the treaty of Versailles in 1919 energy was a penalty imposed on Germany and the

treaty had dire consequences. However, in the European Coal and Steel Community

formed in 1951, energy was used as instrument of peace with great success.

Whether natural gas becomes a blessing or a curse depends entirely on the countries

of the region and their ability to solve legal and political disputes.

66

List of Speakers

“Natural Gas in the Eastern Mediterranean” Conference

Prof. Mitat Çelikpala Kadir Has University, Istanbul

Dr. Oded Eran Institute for National Security Studies

Prof. Samuele Furfari Free University of Brussels, Advisor to the

European Commission’s Directorate General

on Energy

Mr. Jonas Grätz Center for Security Studies (CSS), ETH Zürich

Dr. Ralf Hexel Director, Friedrich-Ebert-Stiftung, Israel

Mr. Sagi Karni Head of the Foreign Affairs Division, Ministry

of Energy and Water Resources, Israel

Mr. Solon Kassinis Director of Energy Services, Ministry of

Commerce, Industry, and Tourism, Cyprus

Prof. Daniel Erasmus Khan Universität der Bundeswehr München

Dr. Rem Korteweg The Hague Center for Strategic Studies,

Netherlands

Mr. Christoph Moosbauer IEPN Coordinator

Dr. Amit Mor CEO, Eco Energy Financial and Strategic

Consulting

Dr. Roby Nathanson Director, Macro Center for Political Economics

67

Dr. Antonyia Parvanova Member of the European Parliament, Vice-

Chairperson of the Committee on Energy,

Environment and Water to the Parliamentary

Assembly of the Union for the Mediterranean

Prof. Stephan Stetter Universität der Bundeswehr München, IEPN

Coordinator

Prof. Harry Tzimitras Bilgi University, Istanbul

Mr. Alexander Varshavsky Petroleum Commissioner, Ministry of Energy

and Water Resources, Israel

Adv. Sarah Weiss-Ma’udi Deputy Director of the International Law

Department Ministry of Foreign Affairs, Israel

Maj. Gen. (ret.) Amos Yadlin Director, Institute for National Security Studies

התיכון הים במזרח טבעי גז

?אזורי פעולה לשיתוף הזדמנות או למלחמה עילה

:עורכים

נתנזון רובי ר"ד

לוי רועי

אביב תל

2102 נובמבר

ii

תקציר

הים במזרח משמעותיים גז שדות תהתגלול החלו 21-ה המאה בסוף

משמעותית גז כמות הכילו לא החדשים השדות. אשקלון מול, התיכון

.באזור הטבעי הגז פוטנציאל את ימוהדג אבל, בינלאומית בחינהמ

מכיל הערכות פי שעל תמר מאגר התגלה 2112 בשנת, יותר מאוחר כעשור

השוואה לצורך) שנה באותה בעולם הגדולה התגלית, טבעי גז BCM 275-כ

מאגר התגלה 2101-ב (.טבעי גז של BCM 5 -כ 2100 בשנת צרכה ישראל

בעשור שהתגלו ביותר הגדולים המאגרים דאח ,(BCM 480) לוויתן

התגלה ובקפריסין, יותר קטנים גז שדות מספר נמצאו במקביל. האחרון

המכון של סקר. BCM 211-כ הערכות פי לע המכיל אפרודיטה מאגר

מיםה את הכולל, התיכון הים שאגן מעריך האמריקאי הגיאולוגי

3,450-כ מכיל וקפריסין וריהס, לבנון, עזה, ישראל של טריטוריאלייםה

BCM שגם מפתיע זה אין, לכן. נפט חביות מיליארד 0.1-ו טבעי גז של

וקידוחי, טבעי גז לחיפוש תוכניות אלו בימים מקדמת לבנון

. וקפריסין בישראל נמשכים האקספלורציה

יכולות אלא, האנרגיה שוק את רק לא לשנות צפויות החדשות התגליות

ממדים עם האזור על אסטרטגיות-גיאו השפעות בעל גורם להוות

בייבוא תלויות היו כה שעד מדינות. וביטחוניים כלכליים, משפטיים

כמו. גז כנראה וייצא ואף אנרגטית עצמאיות יותר להיות יהפכו דלקים

שרר כה שעד מדינות בין פעולה שיתוף להניב יכולות הגז תגליות, כן

סכסוכים של להסלמה ללהובי גם עלולות אך, מתח ביניהן

.טריטוריאליים

למחקרי המכוןו מדינית לכלכלה אקרומ מרכז, אברט פרידריך קרן לכן

Israeli-ה במסגרת בינלאומי כנס 2102 ליולי 5-ב ערכו לאומי ביטחון

European Policy Network (IEPN) משפטיים בהיבטים המתמקד

העיקריות נותהמסק את םמסכ הז ספר. הגז תגליות של ואסטרטגים

iii

זה בחלק .המשתתפים עמדות את בהכרח מייצגת אינו אך, הכנס ולעש

.באנגלית לקרוא ניתן המלא המסמך ואת בעברית תקציר מופיע

גבולות על ומחלוקות משפטיים היבטים

האומות אמנת" היא המים בתחום ביותר החשובה הבינלאומית האמנה

נכנסת האמנה. 0292-ב שנחתמה( UNCLOS" )הים לחוק המאוחדות

מיילים 02 נמשכים הטריטוריאליים שהמים וקובעת 0221-ב לתוקף

חוקית סמכות אותה למדינה זה ושבשטח(, מ"ק 22) לחוף מעבר ימיים

שטח הגדרת הוא האמנה של החשובים החידושים אחד. ביבשה כמו

ימיים מיילים 211 הנמשך( EEZ) המדינה של הבלעדיים הכלכליים המים

לה יש אך, המדינה של השיפוט תחום תחת מוגדר אינו זה שטח. וףמהח

במים הטבעיים המשאבים וניהול שימור, ניצול, לחיפוש בלעדיות זכויות

לניצול בלעדית זכויות יש למדינות האמנה פי על, לכך מעבך .הכלכליים

אל הנמשך היבשת בשולי כמדרון המוגדר, שלהן היבשתי במדף משאבים

.מתון בשיפוע הים לפני מתחת

של הכלכליים השטחיים התיכון המזרח כמו צפוף שבשטח כמובן

להגיע המדינות עלש קובעת האמנה אלו ריםבמק. חופפים מדינות

אינן המדינות אם. ןביניה ימיה גבולה לקביעת זמני הסדר או להסכם

להסדרת לאמצעיים לפנות נקראות הן להסכם להגיע מצליחות

שהצליח (ICJ) לצדק הבינלאומי המשפט בית כגון ותבינלאומי תומחלוק

קמרון בין למשל, ימיים גבולות סכסוכי עם בהצלחה להתמודד בעבר

פנייה או בינלאומית בוררות כוללות נוספות אפשרויות. לניגריה

המשפט בית ימיים גבולות בקביעת. UNCLOS מכוח שהוקם לטריבונל

התחשבות תוך, המדינות בין האמצע קו של מתמטי ניתוח על נשען

, דופן יוצאי גיאוגרפיים םתנאי לכלול שיכולות מיוחדות בנסיבות

. ועוד הוגנות של שיקולים, היסטוריים הסכמים

iv

, ישראל, מדינות 061 מעל ידי על אושררה הים לחוק שהאמנה למרות

המומחים רוב, כן פי על אף .האמנה על חתמו לא וסוריה תורכיה

הפכה, הים לתיחום הנוגעים הסעיפים ובעיקר, שהאמנה מסכימים

אינן אשר מדינות על גם חלה ולכן הבינלאומי מהנוהג חלק להיות

. עליה חתומות

באזור צדדיים-דו הסכמים על חתימהל המאמצים את מובילה קפריסין

לקביעת הסכם על חתמו ומצרים קפריסין 2112-ב. האמנה במסגרת

לבנון עם הסכם, שנה באותה וקףלת נכנס אשר ביניהם הימי הגבול

בין והסכם ,הלבנוני בפרלמנט אושרר לא מעולם אך, 2111-ב נחתם

נחוצים ההסכמים. (2100-ב לתוקף ונכנס) 2101-ב נחתם לישראל קפריסין

וודאות לבהירות שיזכו בינלאומיות חברות למשוך כדי לקפריסין

מובילה יןקפריס, כן כמו. באזור הטבעי הגז בפיתוח בהשקעותיהם

הגז הפקת במסגרת פעולות איחוד הסכמי על לחתימה מאמצים

(unitization ,)במשא ונמצאת מצרים עם מסגרת הסכם על חתמה המדינה

גז שדות כאשר נחוצים פעולות איחוד הסכמי. ישראל עם מתקדם ומתן

על חותמות המדינות אלו במקרים. מדינות בין הימי הגבול את חוצים

הגז שיעור פי על ברווחים תחלקותמו השדה של משותף לפיתוח הסכם

להגיע הצליחו מדינות, מפתיע באופן. מדינה כל של בשטח הטבעי

. ןביניה ברור גבול קו הוגדר לא כאשר אפילו משותף פיתוח על להסכמים

באופן יכולים ’joint development projects‘ המכונים אלו הסכמים

פעולה שיתוף של רבה מידה דורשים ייןעד אך, באזור לסייע תיאורטי

.ולבנון ישראל בין הגבול לסכסוך רלוונטיים פחות ולכן

את צדדית-חד תהקובעו קואורדינטות ם"לאו לבנון הגישה 2101-ב

והגישה ההגדרה על חלקה ישראל .המדינה של הכלכליים המים גבולות

פי על קבענ שלה שהקו טוענת לבנון. 2100 ביולי הגבול לקו שלה גרסה

ושהקו ולבנון קפריסין, מישראל שווה במרחק שנמצאת הנקודה

טוענת, מצידה ,ישראל. המדינות בין היסטוריים הסכמים מפר הישראלי

v

קרטוגראפית/המשפטית הפרקטיקה עם אחד בקנה עולה שעמדתה

הגבול את הגדירו לא ההיסטוריים שהסכמים כך על ומצביעה המקובלת

לקו הסכימה כבר ושלבנון, המדינות של החופים יןב הגבול את או הימי

םע( אישררה לא אך) חתמה שהיא בהסכם ישראל ידי על הוגדרש גבולה

לא מדינה אףו יחסית קטן הוא, ר"מק 951-כ, המחלוקת שטח. קפריסין

משמעותי פוטנציאל בעל שטח זהו אך, זה בשלב קידוחים שם מבצעת

. טבעיים למשאבים

קפריסין בין הגבול קו על נסובה יותר ורכבתמ משפטית מחלוקת

של התורכית לרפובליקה קתמחול למעשה קפריסין, ראשית. ותורכיה

קפריסין לרפובליקתו, בלבד תורכיה ידי על שמוכרת קפריסין צפון

טוענת תורכיה. האי כל של היחידה כנציגה בה מכיר העולם שיתר בדרום

, קפריסין של הנפט מתגליות תליהנו זהה זכות קפריסין צפון שלתושבי

כה עד אך, הנפט ברווחי להתחלק מבטיחים היוונים שהקפריסאים בעוד

תורכיה עם הסכם על חתמה קפריסין צפון. בנושא ומתן ממשא נמנעו

הנפט לחברת העניקה ההסכם בעקבותו, ןביניה הימי הגבול קו להגדרת

החיפוש שטחי. שלה הכלכליים במים גז לחיפוש רישיון התורכית

. קפריסין רפובליקת ידי על הוגדרו שכבר רישיון לשטחי בחלקם חופפים

בין טריטוריאלית מחלוקת גם קיימת, האי בתוך למחלוקות מעבר

שתורכיה מכך נובעת המחלוקת. קפריסין לרפובליקת עצמה תורכיה

חופף תורכיה ידי על המוגדר הימי המדףו ,הימי המדף משטר על נשענת

כלכלית בלעדיות לה שיש טוענת קפריסין שרפובליקת יםשטחל בחלקו

. עליהם

מספקים צדדיים-דו והסכמים משפטי נוהג, בינלאומיות אמנות, לסיכום

קרובות לעיתים אולם, מדינות בין ימיים גבולות לקביעת מסגרת

משפטיות ולא פוליטיות בעיקר הן הימי המרחב תיחום סביב המחלוקת

לרוב ימצאו הן, פעולה משיתוף להימנע יבחרו מדינות עוד כל. מטבען

המשפטית שהמסגרת בעוד לכן. שלהן לפעולות משפטיות הצדקות

vi

לא היא(, לקפריסין ישראל בין למשל) מסוימים במקרים מועילה

-קפריסין, לבנון-ישראל) אחרים ימיים סכסוכים ליישב הצליחה

(. תורכיה

הטבעי הגז פיתוח

אתגרים מציב הגז מאגרי פיתוח, ימיים ותגבול לקבוע לצורך מעבר

וחיםידבק הסביבתית לסכנה המודעות. סביבתייםו טכניים, פיננסיים

האירופי האיחוד. 2101-ב מקסיקו במפרץ הנפט דליפת מאז גדלה ימיים

בכל שיחולו חדשים סביבתיים סטנדרטיים קביעת של תהליך מקדם

תוכניות. אירופאיות ותחבר פועלות בהן האתרים ובכל האיחוד מדינות

במקביל מתכננת ישראל. קפריסין של התגליות על כמובן ישפיעו כאלו

. המדינה של הכלכלי בשטח שיחולו יותר מעודכנים סביבתיים חוקים

המדינה לשטח הטבעי הגז בהעברת האתגרים אחד, המאגר פיתוח לאחר

ינורצב. בתיהם ליד גז מתקן הקמתל מקומיים תושבים התנגדות הוא

מספיקה קיבולת אין לאשדוד הישראליים הגז שדות את שמחבר

החדשים יםמאגרה את לחבר החליטה הממשלהו, לגז המשק של ביקושל

של התנגדות אולם. צפוני צינור באמצעות דור בחוף קליטה לתחנת

מאגר חיבור כתוצאהו המתקן הקמת את עצרה סביבה וארגוני תושבים

מהסכנה נובעת גז למתקני תמקומי גדותהתנ. שנה בכמעט עוכב תמר

מזהמת תעשייה של הקמה יתמרצו שהמתקנים מדאגה, תבטיחותיה

בעוד. מלחמה של במקרה לטילים ליעד יהפוך שהמתקן ומחשש באזור

המדינה, בים לחלוטין יוקמו שהמתקנים דורשות מקומיות שרשויות

. מספיק אמין אינו ימי מתקןשו לכך תקדים שאין טוענת

להחליט יצטרכו מדינות ,ראשית. יותר אף מורכבת לייצוא הגז עברתה

את לחבר ניתן(. LNG) נוזלית בצורה או צינור דרך הגז את להעביר אם

והמדינה גבוה טבעי לגז הביקוש שם, לתורכיה צינור באמצעות הגז

vii

ייתכן אולם. לאירופה קיימת בתשתית הלאה הגז את להעביר יכולה

כדי טובים מספיק אינם וקפריסין לישראל יהתורכ בין היחסיםש

ומשם ליוון בצינור הגז חיבור היא נוספת אפשרות. שכזה הסכם לאפשר

ועומק אורך בשל מאד יקר יהיה ליוון ישראל בין צינור. לאירופה חיבורו

הפרויקט מחיר למרות. טבעי גז של תשתית אין שביוון כיוון וגם, הצינור

והיתכנות פעולה תפויש וישראל קפריסין םא משתלם להיות יכול הוא

. אלו בימים תנבחנ הפרויקט

LNG מתקן להקים צורך יהיה ספינות באמצעות הגז את להעביר כדי

מקומות יצירת הוא ישראל בתוך מתקן בהקמת היתרון. הגז להנזלת

יזכה כזה שמתקן הוא החיסרון אך, אנרגטיה ביטחוןה הגברתו עבודה

הביע כבר הסביבה להגנת המשרד. בנייתו את ושיעכב תיולהתנגדו

מבלי אסיה למזרח גז העברת שיאפשר) באילת מתקן להקמת התנגדות

לתושבים הבטיחותית הסכנה בשל( סואץ בתעלת המעבר על לשלם

סביבתית בדיקה שעורכת ,בקפריסין המתקן את להקים גם ניתן. באזור

ותיאורטית, לכך שטח הקצתה כברו פוטנציאלי מתקן עבור ובטיחותית

תלויה כזו אפשרות כי אם, בשטחן מתקן להקים יכולות ומצרים ירדן גם

בים צף מתקן הקמת היא אחרונה אפשרות. באזור פוליטי-הגיאו במצב

(fLNG .)של מהירה הקמה ולאפשר תהליכים לקצר ניתן כזו בחלופה

.בפועל נבדקה לא עדיין צף מתקן להקמת הטכנולוגיה אך, המתקן

לבחינת הבנות מסמך על חתמו תמר מאגר של הזכויות בעלי בינתיים

. צף מתקן לבניית האפשרות

אירופה הם ייצוא פוטנציאל יש אליהם העיקריים שהשווקים נראה

בעשורים טבעי לגז הביקוש את להגדיל צפויה אירופה. אסיה ומזרח

עם ווחט ארוכי חוזים על חתמו ביבשת נרחבים חלקים כי אם, הקרובים

צפויה לאו טבעי בגז מועט שימוש עושה סין, אסיה במזרח. גזפרום

לקוחות הן קוריאה ודרום שיפן בעוד ,עבורו גבוה מחיר לשלם להסכים

viii

, מאוסטרליה טבעי בגז מוצף יהיה שהשוק ייתכן אך, פוטנציאליים

. וקנדה ב"ארה

חברתיים-כלכליים היבטים

ההשלכות על דיונים כבר חלוה, הטבעי הגז שדות פיתוחל מקבילב

השימוש בישראל והן בקפריסין הן. הגילויים של יותוהחברת הכלכליות

הפקת תאפשר טבעי גז על התבססות. חשמל לייצור הוא ביותר הדחוף

מעבר. אחרים מאובנים לדלקים ביחס יותר ונקי זול, אמין באופן חשמל

כיום. התחבורה נףבע וכן בתעשייה טבעי בגז שימוש צפוי, החשמל לענף

עולה שמחירו בנפט לחלוטין כמעט תלוי העולם ברוב התחבורה ענף

במספר טבעי גז עם מכוניות לתדלק ניתן, אולם. השנים לאורך

הטבע הגז תוהפיכ מתנול(, CNG) דחוס טבעי גז הכוללות טכנולוגיות

ןהקט שטחן את לנצל יכולות וקפריסין ישראל(. GTL) נוזלי לדלק

. ירוק מכוניות לצי למעבר עולמי מודלכ ולשמש

פי על. שמן מפצלי נפט יקהפל כדי הטבעי בגז שימוש היא וספתנ אפשרות

פצלי של בעולם הגדולים המאגרים אחד מצוי ירדןבו בישראל ,הערכות

חדשה הפקה שיטת אך, מאד מזהמת מפצלים נפט הפקת לרוב. שמן

ולשאוב לקרע תמתח הפצלים את לחמם מאפשרת לאחרונה שפותחה

ופרויקט פיתוח בשלבי עדיין הטכנולוגיה. in situ בטכנולוגיית הנפט את

גזה. השפלה באזור הפיילוט בשלב כעת נמצא זו טכנולוגיה על המתבסס

כלכלית משתלם ההפקה תהליךו השמן פצלי לחימום משמש טבעיה

. טבעי מגז בהרבה יקר שהנפט כיוון

גז הקצאת לגבי בעיקר, חברתיות מותדיל גם מציב הטבעי הגז גילוי

את להגביל המליצה צמח ועדת ישראלב .הגז רווחי וחלוקת לייצוא

נטען. הועדה הערכות פי על הזמין הטבעי מהגז BCM ,52% 500-ל הייצוא

, המדינה של הביקוש לאספקת מספיקים םיהנוכחי הגז שגילוי שכיוון

ix

ההמלצה. חדשים גז רימאג לפיתוח משקיעים למשוך כדי הכרחי ייצואה

טענו אחרים ומתנגדים הסביבה להגנת והמשרד, רבה מחלוקת עוררה

בענף שהביקוש, למדינה יש זמין גז כמה להעריך מדי מקודם זה שבשלב

גז עתודות לשמור ושעדיף הועדה מהערכות גבוה להיות יכול התחבורה

. בלבד שנה 25-ל ולא שנה 51-ל

על התמלוגים את שנותל אל המליצה סקיששינ ועדת, הגז לרווחי באשר

הסכנות אחת. הגז מרווחי 21-51% בגובה חדש מס להטיל אך, גז

ניתן הכינוי'. ההולנדית המחלה' איה לכלכלה מציבים שהגילויים

את מגדיל וכך המקומי המטבע את מחזק טבעי משאב גילוי בה לתופעה

, לכן. חותפ לתחרותית המקומית התעשייה את והופך הייצוא מחיר

הקרן. הגז רווחי לניהול ישראלית ריבונית הון קרן להקים חלטוה

-2-ב שימוש תעשה המדינה שנה מדיו למדינה מחוץ הכספים את תשקיע

אושרה לא עוד ההצעה. ייעודיים מקומיים לפרויקטים הקרן מרווחי 1%

הקמת שוקלת קפריסין. הקרן בכספי השימוש אופי על תומחלוק ונותרו

משאבים של הרווחים לניהול הנורווגי המודל את ולומדת ומהד קרן

. טבעיים

אסטרטגיים-גאו שיקולים

מדינות. אנרגטית עצמאות הוא גזה גילויב המרכזיים היתרונות אחד

אנרגיה הפקת לצורך מאובנים דלקים בייבוא תלויות התיכון הים מזרח

הגז, אולם. טיפולי-גיאו סיכון שמהווה זו תלות יפחית טבעיה גזוה

מדינות כאשר. האנרגטי הביטחון על חדש איום ליצור עלול הטבעי

לפגיעה יותר חשופות הן, אחד אנרגיה במקור בולטת בצורה תלויות

תאח קליטה ותחנת אחד צינור יש לישראל כיום, למשל. מקור באותו

פיגוע או טבע אסון, תאונה לכן. במדינה מהחשמל ניכר שיעור להפקת

אמצעי להכין יצטרכו האזור מדינות. החשמל את להשבית יכולים טרור

x

, דלקיות-דו כוח תחנות הקמת באמצעות אם בין, אלו למקרים ביטוח

גיבוי מתקני הקמת או האנרגיה מקורות גיוון, חרום מאגרי על שמירה

. הטבעי הגז מתשתית כחלק

. סיהורו אירופה עם האזור מדינות של היחסים על ישפיע הטבעי הגז

הדגימו שהרוסים וכיוון, טבעי גז לייבוא ברוסיה תלויה כיום אירופה

2112-ו 2116-ב שקרה כפי) הגז ברז את לסגור חוששים לא שהם בעבר

ישאפו אירופה מדינותש סביר(, אוקראינה עם כספיות מחלוקות לאחר

הוא באזור אירופה של שני אינטרס. ןשלה האנרגיה מקורות את לגוון

על שמירה וכן, הגז גילוי בעקבות להיווצר שיכולים סכסוכים על גישור

אזורה מדינותל לסייע יכולה אירופה. וסחר לתעבורה חופשי כאזור הים

פעולה שיתוף כןו הגז שוק של הרגולציה בתחום ידע אספקת ידי על

בהחלט אולם. התיכון הים מדינותב האנרגיה םובתח פרויקטיםל וסיוע

כפי ,פוליטיים שיקולים בגלל יוגבל הפעולה יתוףשש סבירות קיימת

בשל ישראל עם הסכם חסם האירופי הפרלמנט כאשר בעבר שקרה

.לעזה והמשט ההתנחלויות

לתחרות אינטרס לה ואין טבעי לגז הקשר בכל מפתח שחקן היא רוסיה

החל בקפריסין להשפעה מנופים מספר לרוסיה. האירופאי בשוק

, (פירעון מחידלון רחוק לא ניצבת אשר פריסיןלק הנחוצות) ותמהלווא

שלה במחלוקות בקפריסין פוליטית בתמיכה וכלה הדדיות השקעות דרך

. ישראל עם הןו קפריסין עם הן תרבותי קשר רוסיהל כן כמו. תורכיה עם

של ובמקרה, מהאזור הגז ייצוא את להפחית היא רוסיה של המטרה

לכן. חלק בכך תיקח ושרוסיה אסיה למזרח יועבר שהגז לוודא ייצוא

. תמר של הזכויות בעלי עם הבנות מזכר על חתמה כבר גזפרום

xi

האזור על שליליות השפעות - סכסוכים ליבוי או פעולה שיתוף

משאבים של גילויים לאחר לעלות יכולים שמתחים מוכיחה ההיסטוריה

יןב הטריטוריאליות במחלוקות סין ים בדרום למשל קרה כך, טבעיים

בהיבטים התמקדנו כה עד. ומלזיה הפיליפינים, וייטנאם, סין

. האסטרטגי בממד נתמקד זה בחלק, הצדדים בין במחלוקות המשפטיים

תורכיה. באזור הגז שוק על רבה השפעה לתורכיה קפריסין בין לסכסוך

ויוון קפריסין, ישראל בין פעולה ושיתוף התיכון הים שתיחום חוששת

המהירה לצמיחה הנחוצים משאבים ממנה וימנעו המעמד את יפחיתו

עד הגז קידוחי כל את להפסיק לקפריסין קוראת המדינה לכן. שלה

לקפריסאים היוונים הקפריסאים בין לסכסוך כללי פתרון שיושג

הטבעיים המשאבים נושא על ממוקד ומתן משא לנהל או ,התורכים

מציבים החדשים הגילויים ,זאת לעומת ,סיןילקפר. ם"האו בחסות

נעזרת תורכיה. החדש קוו הסטטוס את לשמר המעדיפ יאוה, הזדמנות

קידוחים תאפשר שלא הבהירה היא, שלה טרסיםהאינ לקידום באיומים

. אפרודיטה בשדה לקידוח להגיב איימה ואף במחלוקת שנויים בשטחיים

שלא הבהירה היאו באזור צבאים תרגילים מקדמת המדינה, מכך יתרה

שיוןיהר תחת שפועלות בינלאומיות אנרגיה חברות עם פעולה תשתף

אקספלורציה ספינת לליווי קרב מטוסי שלחה אף תורכיה. הקפריסאי

בחלקם וחופפים קפריסין צפון ידי על שהוקצו שטחים לחקור בדרכה

כה עד. בעלות טוענת קפריסין רפובליקת עליהם הימיים יםלשטח

ייתכן בהחלט אך, ןקפריסי של קידוחיםה את לעצור הצליחה לא תורכיה

בין לקרע ותוביל בינלאומיות חברות מאזור תרחיק נוספת שהסלמה

. לתורכיה האירופי האיחוד

בעקבות בעיקר ,האחרונות בשנים התדרדרו ישראל-תורכיה יחסי גם

נראה. נפסק המדינות בין הצבאי הפעולה שיתוף ומאז ,לעזה המשט

טוענת אינה תורכיה אמנם. המשבר את החריפו רק הגז שתגליות

בעין רואה לא היא אך, ישראל של הכלכלי בשטח התגליות על לבעלות

xii

בין המסתמנת הברית ואת, קפריסיןו ישראל של הפעולה שיתוף את יפה

. ליוון המדינות שתי

ישראל בין למתיחות נוסף מחלוקת תחום סיפקו הגז תגליות, לבסוף

והבהירו לוחמנית ברטוריקה נעזרו םהצדדי בשני שרים. ללבנון

חוששת ישראל. המשאבים על להגן כדי שנחוץ מה כל תעשה שמדינתם

תירוץ ויספק, שבעא חוות של הימית לגרסה ךיהפו במחלוקת שהשטח

חוששת ,מצידה ,לבנון. חיזבאללה של תוקפניות פעולותל מתמיד

ידתמ. בשטחה חדשה ימית ביטחון רצועת למעשה יוצרת שישראל

, צפויה לא צבאית פעולה לכדי תתפתח מאיימת קהירושרט סכנה קיימת

מוגדר לשטח המחלוקת םוותיח המנהיגים של צהרותהה מיתון לכןו

. חיובית התפתחות מהווים וספציפי

האזור על חיוביות השפעות - סכסוכים ליבוי או פעולה שיתוף

היא הגז ותתגלי בעקבות פורה פעולה לשיתוף ביותר הטובה הדוגמא

רשמית משלחת לראשונה הביקר 2100 בפברואר. קפריסין-ישראל יחסי

םהסכ נחתם הביקור במסגרת .בקפריסין ישראל ממשלת ראש של

המאגרים בין גז צינור בחיבור דנו המנהיגים. הגז בתחום פעולה לשיתוף

. הגז באבטחת פעולה ובשיתוף משותף לפיתוח באפשרויות, המדינות של

בשטח שימוש תעשה שישראל אפשרות שעלתה דווח ,כן כמו

גם המדינות. שלה הגז מאגרי על ותגן קפריסין של הטריטוריאלי

כבל ברחל באפשרות ודנות יותר יםגדול אזורים פרויקטים מקדמות

המדינות בין הגובר הפעולה שיתוף. ויוון קפריסין, ישראל בין חשמלי

שיתוף באמצעות שרק הבנהמה וכן טורקיה עם שתיהן של מהמתח נובע

. הגז רווחי את למקסם יהיה ניתן פעולה

xiii

,משפטיות ,חברתיות, כלכליות השלכות הטבעי הגז לגילוי, לסיכום

את להחריף יכולות התגליות. בזו זו השזורות ואסטרטגיות פוליטיות

שיתוף לעודד דווקא או, האזור מדינות בין מתיחות של קוו הסטטוס

0250-ב שהוקמה האירופית והפחם הנפט שקהילת יכפ בדיוק, פעולה

הגז תגליות של הסופית ההשפעה. האירופי לאיחוד דבר של בסופו הפכה

סכסוכים לפתור וביכולתם ההחלטות מקבלי של חזוןב תלויה

. טריטוריאליים

9789657

523216

ISBN 978-965-7523-21-6